Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

BRIGHTON CORPORATION BILL

(By Order)

CITY OF LONDON (VARIOUS POWERS)

(By Order)

GREATER LONDON LOCAL RADIO AUTHORITY BILL

(By Order)

LONDON TRANSPORT BILL

(By Order)

WALSALL CORPORATION BILL

(By Order)

WELLAND AND NENE (EMPINGHAM RESERVOIR) AND MID-NORTHAMPTONSHIRE WATER BILL

(By Order)

WEST BROMWICH CORPORATION BILL

(By Order)

WOLVERHAMPTON CORPORATION BILL

(By Order)

YORK CORPORATION BILL

(By Order)

GREATER LONDON COUNCIL (GENERAL POWERS) BILL

(By Order)

LUTON CORPORATION BILL

(By Order)

Second Reading deferred till Tuesday next.

PETITION

Bearsted Memorial Maternity Hospital, Hampton (Closure)

Mr. Gresham Cooke: I have to present to the House a public Petition against the closure of Bearsted Memorial Maternity Hospital near Hampton Court in my constituency. The Petition was started in November, shortly after the proposed closure was announced, and it was com-

pleted in December. It carries 7,888 signatures.
The Petition sheweth,
Whereas it has been announced that the Bearsted Memorial Hospital being a maternity hospital in Hampton serving the residents of the constituency of Twickenham including Teddington and Hampton, and the constituencies of Esher, Spelthorne, Kingston upon Thames, Feltham, Richmond and Barnes, and Heston and Isleworth, surrounding the hospital, is to be closed, that such action will cause great inconvenience to the public it serves and to the staff of the hospital, requiring patients to go many miles at considerable expense for treatment which is their right under the National Health Service.
Wherefore your Petitioners pray that the Bearsted Memorial Hospital continue as a hospital dealing with maternity cases under the National Health Service.
And your Petitioners, as in duty bound, will ever pray, etc.
To lie upon the Table.

Oral Answers to Questions — PUBLIC BUILDING AND WORKS

Building Materials (Import Substitution)

Sir G. Nabarro: asked the Minister of Public Building and Works what economy in imported building materials occurred in 1968 as a result of the policy of import substitution; and what further progress he estimates for 1969.

The Minister of Public Building and Works (Mr. R. J. Mellish): The practical possibilities of import substitution in building materials are limited, and changes are unlikely to take place quickly. No significant change can be demonstrated in respect of 1968, but I am continuing to encourage the use of home-produced materials, and savings in the use of imports, whenever these steps are practicable and economic.

Sir G. Nabarro: Is the right hon. Gentleman aware that that oft-repeated statement now smacks of pious exhortation, with tiny results—[Laughter.] Mr. Speaker, may I have some protection against Easington?

Mr. Speaker: Order. The hon. Gentleman must not interrupt himself.

Sir G. Nabarro: When I have quietness, I shall proceed. [HON. MEMBERS: "Oh."] The Minister's statement smacks


of pious exhortation and, as we have said for twelve months now that we propose to proceed with a policy of import substitution, would it not be reasonable to expect some results at an early date instead of pious exhortation?

Mr. Mellish: I find the hon. Gentleman extraordinary in many respects. He asks me for information. I do not know why he does, as I gather that he has a printer in the Midlands who can tell him everything.

Building Control Licensing

Sir G. Nabarro: asked the Minister of Public Building and Works what effects he has measured in recent months of the ending of building control licensing; whether he is now satisfied that all home-produced building materials are abundantly available; and if he will make a statement.

Mr. Mellish: It is still too early to assess the impact of the suspension of building licensing. The situation will remain under review. No national shortage of major home-produced building materials is envisaged during 1969.

Sir G. Nabarro: Why was this expensive Aunt Sally set up at all? After two years of blathering, the right hon. Gentleman abolished it. Is it not a fact that he now finds that he can do well without it? Why is he so enamoured of this form of control?

Mr. Mellish: I did not set it up personally. I am the one who abolished it.

Mr. W. Baxter: There is a serious aspect to these two Questions. Has my right hon. Friend given serious consideration to copper substitution in the building industry, since he must be aware that the present cost of copper is almost prohibitive in building? Is not greater research required so as to give better substitutes for copper?

Mr. Mellish: My hon. Friend is right, and I accept that there is a serious point behind the Questions. Copper is mainly used for piping in plumbing, as hon. Members know. Research is now being done into the production of alternative materials to copper in domestic plumbing systems and into ways of economising in the use of copper. Thin-wall copper

tubing is coming into fairly widespread use.

Mr. Chichester-Clark: Is the right hon. Gentleman aware that there is beginning to be concern in the industry about mounting stocks of bricks, especially in view of the Government's announcement that housing starts are likely to be lower than last year?

Mr. Mellish: I do not see how that necessarily links up with the Question on the Order Paper. The brick makers themselves have made no representations to me, but in view of what the hon. Gentleman has said I will discuss the matter with them.

Constitution Hill (Lighting)

Mr. St. John-Stevas: asked the Minister of Public Building and Works whether he will make a statement on the lighting installed on Constitution Hill.

The Parliamentary Secretary to the Ministry of Public Building and Works (Mr. Charles Loughlin): Early last year, my right hon. Friend informed the House that the old gas lamp standards in this road would be retained and that experiments would be carried out to determine how the best standard of lighting with electricity could be achieved. A suitable solution was eventually found, and the necessary conversion work to the old standards was completed last September.

Mr. St. John-Stevas: While being grateful for what has been done by the Minister in preserving us from the horror of concrete lamp standards, may I ask the hon. Gentleman to do something about the sodium lighting, which blinds and dazzles everyone using that beautiful approach? Will he provide an æsthetic Magna Carta for Constitution Hill?

Mr. Loughlin: I would not risk saying that I could introduce an æsthetic Magna Carta for Constitution Hill, but I think the hon. Gentleman accepts that my right hon. Friend has done everything possible to meet every objection in the conversion scheme, and the degree of illumination at the moment has the approval of the road traffic authorities.

Mr. McNamara: Is my hon. Friend aware that many people who go home from this place in the evening by way


of Constitution Hill are much impressed by the improvement in the lighting which has been possible even with the retention of the old standards?

Naval Dockyards (Review)

Mr. Judd: asked the Minister of Public Building and Works whether he will make a statement on the implications for his Department's personnel in Portsmouth of the Government's review of the future of naval dockyards.

Mr. Mellish: No, I cannot anticipate my right hon. Friend's forthcoming statement on Defence.

Mr. Judd: Is my right hon. Friend aware that his last visit to Portsmouth did a great deal to clarify the Ministry's policy towards the existing labour force? Can he assure us that there will be the fullest consultation again following the announcement in the White Paper next month about the future of the naval dockyards?

Mr. Mellish: I am obliged to my hon. Friend for his comments on my visit. I found both our people and those of the M.O.D. first-class and doing a fine job. I promise them the full consultation they have a right to expect.

New Houses (Condensation)

Mr. Dalyell: asked the Minister of Public Building and Works what is his assessment of the work done for his Department at Royal Aircraft Establishment, Farnborough, on condensation in recently-built houses.

Mr. Loughlin: Condensation is not a suitable problem for investigation at the Royal Aircraft Establishment. The Department is discussing other possibilities with the Ministry of Technology: these include structural studies, new materials, the control of engineering services and the effects of sonic bangs.

Mr. Dalyell: What steps are being taken to publicise this work in the trade? Would not some kind of handbook be a suitable way?

Mr. Loughlin: I appreciate that there is a problem of dissemination of information on condensation problems. The Department and the other bodies concerned do what we can to make the

information widely available. Within a few weeks we shall publish a handbook for designers to deal with condensation and for the trade as a whole.

Mr. Costain: I congratulate the Parliamentary Secretary on his new appointment and wish him a happy if short stay in it. Is he aware that the National Federation has produced a useful handbook and a pamphlet? Will he do what he can to get them circulated among local authorities?

Mr. Loughlin: The hon. Gentleman will accept that there is a great deal of co-operation between the industry and us. Where the Department's services are required by the industry for dissemination of information of all kinds, we are willing to consult with the industry if it approaches us. I would add that my occupancy of my new position may be much longer than the hon. Gentleman thinks.

Land Commission (Scotland)

Mr. W. H. K. Baker: asked the Minister of Public Building and Works what is the total cost of the acquisition by the Land Commission of offices and other accommodation in Scotland to date; and what annual rentals are paid for such other premises held on lease.

Mr. Mellish: No properties have been acquired in Scotland for the Land Commission. The annual rental and service charges for leased premises currently occupied by the Commission amount to some £17,000.

Mr. Baker: In view of the lack of activity of the Land Commission in Scotland, is not even that figure disproportionate in the disbursement of public funds? Will not the right hon. Gentleman reconsider the whole thing by bringing the Land Commission to a speedy conclusion?

Mr. Mellish: I understand that on Thursday there is to be a full scale debate on the Land Commission when no doubt we shall hear a great speech from the hon. Gentleman.

Mr. Hector Hughes: Is it not improvident to concentrate the Land Commission and other offices in the thickly populated parts of Scotland, where rents are dear, instead of spreading them more


evenly up in the North-East, particularly Aberdeen?

Mr. Mellish: I take note of that, but as a southerner one has to be very careful in this House in saying anything about what one should do in Seotland.

Steam Boilers

Miss Quennell: asked the Minister of Public Building and Works how many steam-boilers his Department maintains on behalf of his own or other Government Departments.

Mr. Loughlin: About 4,500.

Miss Quennell: What steps is the hon. Gentleman taking to ensure that the employees of his Department engaged in servicing these 4,500 boilers are exempt, through his Department, under Section 37 of the Industrial Injuries Act, 1961, from any claim to liability should they be injured during the course of their duties?

Mr. Loughlin: I accept that we have exemption from liability under Sections 32–34 of the Act, but I assure the hon. Lady that we try to keep the maintenance of these boilers in accordance with the Act. We have regular inspections and, in addition, there is constant supervision to ensure that employees are not injured. I appreciate that the hon. Lady has a case here, but I assure her that we do our best.

Local Authority Design Work Figures

Mr. Waddington: asked the Minister of Public Building and Works whether he will take steps to ensure that in future in the case of local authority and private architects' drawing offices the level of design work for building entering the production stage will be expressed in quarterly figures; and if he will make a statement.

Mr. Rossi: asked the Minister of Public Building and Works whether he will now make a statement on the latest statistical survey of design work for building entering the production drawing stage, details of which he has received.

Mr. Mellish: I shall explore with the local authorities the possibility of changing the local authority design figures

from a four-monthly to a quarterly basis. Quarterly collection involves some difficulties for the local authorities, which is what led to the present arrangement. But now that valuable initial information has been collected I hope by some simplification of returns to get over these difficulties. This will put the series on the same basis as that published by the R.I.B.A.

Mr. Waddington: While I thank the hon. Gentleman for that reply, which is most welcome and should make life a lot easier for us in future, I hope that he will not forget the Question which brought up this matter in the first place and will bear in mind that many of us are still concerned at the level of the present work as revealed in his Answer of 3rd December.

Mr. Speaker: Order. Supplementary questions must be questions.

Mr. Mellish: I thank the hon. Gentleman for his Question. After his previous Question and my supplementary answer to it, I saw that there was a weakness in the arrangement. I have explained some of the difficulties encountered, but the hon. Gentleman and I both have the same objective in this.

Construction Industry (Metric System)

Mr. Costain: asked the Minister of Public Building and Works how many projects using metric dimensions his Department has sent out to tender.

Mr. Loughlin: None in the United Kingdom, Sir. In accordance with the programme published by the British Standards Institution for the change to metric in the construction industry, the Department began on 1st January, 1969, to design most of its new projects in metric dimensions, except where construction work is expected to start before 1st January, 1970. Overseas, we use metric dimensions in those countries where it is the established practice.

Mr. Costain: This is a welcome decision. Does the hon. Gentleman appreciate that in many countries where the metric system may appear to be used—for example, Zambia—the imperial method is still being learned by artisans?


Could this be designed both ways if we must go metric?

Mr. Loughlin: Where the imperial method is common practice we will check to see whether it is practicable, and where we introduce the metric system we will try to ensure that there is no possibility of a design going wrong simply because there is no conversion to imperial standards.

Prince of Wales (Investiture)

Mr. Emrys Hughes: asked the Minister of Public Building and Works what expenditure he is incurring in connection with the investitute of the Prince of Wales at Caernarvon Castle.

Mr. Mellish: There is no alteration to the net figure of £55,000 which I gave to my hon. Friend on 22nd July last.—[Vol. 769, c. 6.]

Mr. Hughes: Is my right hon. Friend aware that this expenditure on Caernarvon Castle for the investiture will involve a considerable amount of building labour—plumbers, builders and so on—for one day's celebration? Since 35,000 people in Wales are without water closets, including 2,000 to 3,000 in Caernarvonshire, will he consider recommending that this ridiculous, absurd, mini-coronation be postponed and priority be given to people who have no sanitary accommodation?

Mr. Mellish: If he is talking about the financial aspects, and if my hon. Friend will only for once in his life do his sums right, he will find that we are going to make a great deal of money out of this expenditure.

Mr. St. John-Stevas: Would the Minister not agree that while there is an argument for having no investiture and an argument for having a splendid investiture, there is no case at all for having a mean one?

Mr. Mellish: indicated assent.

Mr. Fred Evans: asked the Minister of Public Building and Works what is the total sum of public funds allocated through contracts for work in connection with the investiture of the Prince of Wales; and what percentage of this money has gone to contracts with firms in Wales.

Mr. Mellish: So far seven contracts have been let to a total value of just over £80,000. Five of these are to Welsh firms to a value of just over £44,000, including one to Remploy for chairs to be manufacturers by disabled persons in Welsh factories. The remaining two contracts are for specialist work for which there are no Welsh firms available. A number of other contracts are still under consideration and, wherever possible, will be given to firms in Wales.

Mr. Evans: While thanking my right hon. Friend for that information, may I asked whether he is aware that, quite apart from the question of the acceptability or otherwise of the investiture to the Welsh people, there is considerable criticism of the degree of expenditure incurred? Can he tell the House whether any further benefits may be expected to accrue to the Welsh economy from the investiture?

Mr. Mellish: I do not think that there can be any doubt that this investiture will bring a great deal of tourist trade to Wales, more probably than it has ever had. My Department, for example, is working in this matter. We will sell chairs, investiture medals, seats on the moats, etc., from which we expect not less than £100,000. This is an investiture which, apart from the arguments about whether it should be held, is something out of which the Welsh people will do extremely well, and I am delighted that it is being held.

Sir Knox Cunningham: Can the Minister give any estimate of the number of visitors who will be brought to Wales and the amount of money they will bring in as a result of the investiture?

Mr. Mellish: I cannot give numbers, except to say that those responsible, the Tourist Board and the rest are, I understand, overwhelmed with requests, from abroad in particular, for hotel accommodation and such things. They are absolutely swamped with inquiries.

Metrication Board

Mr. Speed: asked the Minister of Public Building and Works whether he will now announce the name of his Department's representative on the Metrication Board.

Mr. Loughlin: I have nothing to add to the answer given by my right hon. Friend the Minister of Technology to the hon. Members for Sheffield, Hallam (Mr. J. H. Osborn), and Glasgow, Cathcart (Mr. Edward M. Taylor) on 29th January.—[Vol. 776, c. 1296–8.]

Mr. Speed: Is the hon. Gentleman aware that his plans for metrication of the construction industry in three years' time could be jeopardised by the lack of instruction and education, largely due to the cuts in further education now taking place? Could he speak to his right hon. Friend the Minister of Education about this?

Mr. Loughlin: That is a rather different question from the one on the Order Paper. My right hon. Friend will note what the hon. Gentleman says.

British Standard Time

Mr. Speed: asked the Minister of Public Building and Works whether he will arrange for his National Consultative Council to study the impact of British Standard Time upon the construction industry.

Mr. Donald Williams: asked the Minister of Public Building and Works what further representations he has received from the National Federation of Building Trades Employers about British Standard Time and the experience of building employers of its effect; and what reply he has sent.

Mr. Mellish: At the request of the N.F.B.T.E. the effects of B.S.T. will be discussed at the next meeting of my National Consultative Council for Building and Civil Engineering which will take place on 19th March, 1969.

Mr. Speed: Will the right hon. Gentleman confirm that nearly all sections of the construction industry, to say nothing of the general public, are opposed to B.S.T.?

Mr. Mellish: I can confirm that in particular the N.F.B.T.E. is certainly bringing to my attention what it regards as the disastrous effects of B.S.T. It is putting forward a paper making its case conclusive, from its point of view. When that happens, I shall most certainly approach my right hon. Friend the Home Secretary and present its views.

Mr. Williams: I am glad to hear the Minister make this statement. May I assure him that all building employers are totally against British Standard Time?

Mr. Mellish: I accept that, certainly in the construction industry, I have heard nothing but complaints about B.S.T. Having said that, let us not lose sight of the argument that there is another point of view from people in other industries.

Mr. Heffer: If my right hon. Friend finds that the evidence is so overwhelming that there should be a change, would he give us an assurance that he will draw this to the attention of the appropriate Minister with a view to having the three years cut down to at least one year, which is what many of us suggested?

Mr. Mellish: I can give this assurance, that after my meeting on 19th March, when I hope I shall see statistical evidence produced by the employers—and I very much hope that the unions will help in this matter—I will see my right hon. Friend the Home Secretary and put the case as strongly as I can for the industry I represent.

Miss Harvie Anderson: Will the Minister accept, since he is hesitant through being a Sassenach in this matter, that B.S.T. is an even greater disaster in Scotland? Will he make special representations for advice from those concerned north of the Border?

Mr. Mellish: Yes, I give an undertaking to the hon. Lady that I will take that into account.

Selective Employment Tax

Mr. Donald Williams: asked the Minister of Public Building and Works whether he will now make a further statement on the impact of Selective Employment Tax on the construction industry.

Mr. Mellish: I have nothing to add to the reply I gave to the hon. Member for Torrington (Mr. Peter Mills) on Tuesday, 3rd December, 1968.—[Vol. 774, c. 1220–2.]

Mr. Williams: Will the Minister give us an assurance, on behalf of the industry for which he bears some responsibility, that he will make representations to the Chancellor to remove this impost,


which is running at the rate of £120 million a year, from the industry? Is he aware that it also increases the cost of the average house by £150?

Mr. Mellish: The hon. Member knows that all taxes are extremely unpopular, but this one has a particular unpopularity. The Reddaway Committee has been set up and the industry is now able to make its representations. We must await the result of that inquiry.

Building Industry (Economic Development Committee)

Miss Harvie Anderson: asked the Minister of Public Building and Works when he proposes to attend a meeting of the Economic Development Committee for the building industry.

Mr. Mellish: I am always willing to attend a meeting of either construction industry E.D.C. if it seems appropriate for me to do so.

Miss Harvie Anderson: Would it not seem particularly appropriate since this body has been without a chairman since September 1968? Is he aware that it would be very welcome news if we were to have an announcement of a new chairman or alternatively were to be told that the whole thing was to be scrapped?

Mr. Mellish: The chairmanship of the E.D.C. is a very difficult job and we must take care that the right man is appointed. I am sorry that a chairman has not yet been appointed. I attended a meeting of the two E.D.C.S last year. I understand that they are due to meet again in March.

Mr. Chichester-Clark: Is it not rather discreditable on the part of the Government that there is no chairman so far? Is not the truth of the matter that the Government have set up so many boards and committees that businessmen and professional men simply have not the time to serve on them?

Mr. Mellish: That is a gross overstatement—as usual. The majority of these E.D.C.s, including these two in particular, have done and can do a first-class job of work. We are having difficulty over the appointment of a chairman. He must be the sort of person acceptable to

the industry. It would be wrong for the Government simply to say, "This is the man to do the job". There have to be consultations, and these are going on.

Departmental Forms and Statistics

Miss Harvie Anderson: asked the Minister of Public Buildings and Works what progress he has made since the month of December, 1968 in minimising the duplication of Departmental forms sent to building contractors asking for statistical information; and whether he will make a statement.

Mr. Kenneth Baker: asked the Minister of Public Building and Works whether he will now announce his proposals for rationalising and reducing the amount of statistical information required by his Department from building contractors under the Statistics of Trade Act, 1947.

Mr. Loughlin: New-style industrial statistics are being planned by inter-Departmental teams under the general direction of the Central Statistical Office, and some 150 industries in the economy are being consulted over the next few years according to a prepared time-table. Negotiations with the first of the building materials industries have started. Discussions with the construction industries will begin early next year.

Miss Anderson: While thanking the hon. Gentleman for some rather vague hope, I am bound to say that the complications in the reply did not give me a great deal of confidence. There are at least three Departments concerned—[HON. MEMBERS: "Question."]—is that not a fact?

Mr. Loughlin: I ought to congratulate the hon. Lady on getting the question in. I am sorry that the Answer has not satisfied her. I can assure her that it was designed to give her a clear picture of what is going on and to show our attempts to get this new statistical system operating as quickly as possible.

Mr. Baker: Is it not possible to get this new statistical set-up before 1970? At the moment every building company has to make an employment statistics return to three Government Departments. Cannot all this be done through one Government Department?

Mr. Loughlin: As I said, we are dealing with new statistical methods for many industries. These statistics are designed to be of assistance not merely to the Government but to the industries. We are developing the system in consultation with them. I accept that we have to try and ensure that there is no unnecessary duplication in the information supplied to us. If one looks at the Questions on the Order Paper it will be seen that we really need more statistics.

Mr. Chichester-Clark: But could not the hon. Gentleman find out why the Inland Revenue, the Board of Trade and his Department all want separate forms filled up in connection with these employment figures?

Mr. Loughlin: We shall do what we can to have the minimum duplication of statistics. It may well be that in certain circumstances they are required for different Departments. However, I assure the hon. Gentleman that we have examined this matter carefully and we think the timetable is about right.

Contracts (Smaller Firms)

Mr. Kenneth Baker: asked the Minister of Public Building and Works how many contracts for new construction work were let by his Department in 1968 to building firms employing between 100 and 500 men; and what percentage they represented of the total number of contracts let by his Department.

Mr. Mellish: This information cannot be obtained without the expenditure of a disproportionate amount of staff time.

Mr. Baker: Would the Minister care to reconsider his Answer? If he published this information, it would, I think, allay some of the fears and suspicions, which are probably unfounded, that medium building companies are not getting a fair crack of the whip.

Mr. Mellish: The hon. Gentleman cannot have it both ways. On a previous Question he bitterly complained about the amount of statistics. Then he asks what he regards as an honourable question and wants more information. I am simply saying that there is a limit, which I think we have reached, in asking many of these firms for the sort of information which the hon. Gentleman wants.

Mr. Costain: We enjoy the right hon. Gentleman's little bit of humour about the statistics, but does not he realise that the medium builder is having a very tough time at the moment? [Laughter.] I do not know why hon. Members should laugh at the plight of the small builders. In selecting tenders, would it not be well for his Department to give some encouragement to small firms?

Mr. Mellish: The hon. Gentleman knows only too well that one of the reasons why smaller and medium builders are in trouble is that some of the very large firms are doing far more of the work than they used to do. The point about information is perfectly fair and I should be prepared to make the effort to get the information, but I resent the fact that, when I try to obtain information, questions are asked by hon. Members opposite in which they complain about the amount of staff I am employing to get it.

Registration of Builders (Forbes Inquiry)

Mr. Costain: asked the Minister of Public Building and Works whether he will name the members of the Forbes Committee on the registration of builders; and how many times the Committee has met to the latest convenient date.

Mr. Mellish: The members of the Forbes Inquiry are:—

Mr. H. H. V. Forbes, Q.C. (Chairman)
Mr. L. F. Wigdor, Managing Director of Tunnel Refineries Ltd.
Mr. E. Haynes, President of the Bakers' Union.
Mr. P. D. H. Stock, Chief Estate Officer, I.C.I. Ltd.
Sir Sidney Ford, M.B.E., President of the National Union of Mine Workers.

The two assessors are:—

Mr. Eric Segrove (N.F.B.T.E.).
Mr. A. E. Soones (N.F.B.T.O.).

The Inquiry will hold its first meeting later this month.

Mr. Costain: The Chairman was appointed in September and only today the Minister announces that the first meeting of the Committee is to take place. Would he hurry the Committee to get on with its job?

Mr. Mellish: That is ungrateful. This is something which has been talked about in the industry for years. At least I have set up a Committee to look into the possibilities. We have appointed the Chairman. Various parts of industry have had to be consulted. We have an impartial Committee and we have the two assessors. I should have thought that the hon. Gentleman might have said, "Well done, bravo."

Plywood

Mr. Allason: asked the Minister of Public Building and Works what studies he has made of the effect on the construction industry of current import restrictions on plywood.

Mr. Mellish: My Department is in close touch with the Board of Trade which is responsible for plywood. Practically none of the plywood used in the construction industry is made in this country. So far there is no evidence that the operation of the imports deposits scheme which covers plywood is causing any disruption of essential industries. There is no shortage, and stocks are plentiful. I will continue to watch the situation.

Mr. Allason: But since this is a vital material for the construction industry, is it not absolutely crazy to put difficulties in the way of its import?

Mr. Mellish: I have not heard from the industry that there are difficulties. I do not know where the hon. Gentleman gets his information from.

Museums

Mr. Allason: asked the Minister of Public Building and Works what is the current building cost of providing museum space per square foot.

Mr. Mellish: Between £9 and £13, depending on the use of the building. If land has to be bought or if there are abnormal site circumstances, the cost would be higher.

Mr. Allason: Will the Minister give an undertaking that he will not destroy any museum space at Tring or elsewhere until he is absolutely satisfied that there is no alternative use for the museum building, bearing in mind that every London museum is short of space?

Mr. Mellish: The hon. Gentleman should come and discuss this matter with us. There is another point of view which is completely contrary to that about which he wrote a letter in The Times. The present building is in a very bad condition. It is 60 years old. It is not adequate. The museum trustees are in full accord with what we are doing. If we adopt an alternative method, it will cost more. I invite the hon. Gentleman to come to my Ministry and discuss this matter.

Mr. Wellbeloved: Will my right hon. Friend take this Question seriously? There is need to make certain that there is adequate museum space for any phantom printing proofs which the hon. Member for Worcestershire, South (Sir G. Nabarro) may one day produce.

Mr. Channon: First, could the Minister tell us how much of the present building at Tring it is proposed to demolish? Secondly, what would the extra cost be to public funds if the plan of my hon. Friend the Member for Hemel Hempstead (Mr. Allason) about building on fresh land were adopted?

Mr. Mellish: I understand that the present floor space is about 20,000 sq. ft. We cannot use land which is nearby because it is in the Green Belt; and there are other restrictions. I understand that there has already been an inquiry into the Ministry scheme, which has the approval of the local planning authority. I cannot give the extra cost, but I am prepared to write to the hon. Gentleman and to give him full details, which he has every right to ask for.

Building Materials and Components (Testing)

Mr. Kitson: asked the Minister of Public Building and Works what agencies have been used by the Agrément Board to test new building materials and components other than the Building Research Station.

Mr. Rossi: asked the Minister of Public Buildings and Works what is the present relationship between the Agrément Board and the Building Research Station for the testing of new building materials and components; and whether he will make a statement.

Mr. Mellish: The Building Research Station acts as a technical agent to the Agrément Board in developing methods of testing and assessment for new products and in carrying out tests on products submitted to the Board for certification. The Forest Products Research Laboratory, the Fire Research Station, the University of Aston, Yarsley Research Laboratories and Messrs. R. H. Harry Stranger have also been employed by the Board on significant pieces of test work.

Serial Tendering

Mr. Kitson: asked the Minister of Public Building and Works whether he will make a statement on the progress of his Department's experiments in serial tendering.

Mr. Loughlin: Following the recommendations of the Banwell Committee, six experimental serial programmes have now been organised in my Department. Arrangements have been made to monitor and evaluate progress on these programmes. These are all large scale projects and the arrangements will continue throughout the whole building process.

Mr. Kitson: Will not the hon. Gentleman consider implementing the recommendation of the Banwell Committee?

Mr. Loughlin: I think that before we start considering the recommendations of the Banwell Committee we should get this experiment off the ground first.

Oral Answers to Questions — MINISTRY OF POWER

Shipbuilding Industry (Steel Prices)

Mr. Edward M. Taylor: asked the Minister of Power what representations he has received from the shipbuilding industry regarding the price of steel; and what reply he has sent.

The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): My right hon. Friend has received a copy of the representations addressed to my right hon. Friend the Minister of Technology on behalf of the Shipbuilding and Shiprepairing Council, and has noted them.

Mr. Taylor: Is the hon. Gentleman aware that there is serious concern that the industry, with knife-edge prosperity created by recent legislation, might be threatened by this increase in steel prices,

which comprise 20 per cent. of the costs of the yards? Is he further aware that this is particularly serious in the case of yards like Clydeside, where we can build sophisticated ships and where an increase, which was not an overall increase but a specialist increase, would have serious effects?

Mr. Freeson: As the hon. Gentleman knows, the proposed price increases have been referred to the National Board for Prices and Incomes, which is examining them, and the shipbuilders will be submitting evidence. I also understand that the Iron and Steel Consumers' Council will be looking at the proposals. It is open to the shipbuilders to submit evidence to the Council as well.

Mr. James Hamilton: Is my hon. Friend aware that there is grave concern in the steel construction industry about this increase, which will have a very serious effect on our exports which are urgently required to help the balance of payments?

Mr. Freeson: I am aware of the concern expressed on this proposal by the shipbuilders. It is for the N.B.P.I. to give very careful consideration to it. On the question of the relationship between the two industries, apart from these price increases, they have had discussions together on possible co-operation, and I hope that they will continue them.

Mr. Patrick Jenkin: Will the Minister draw to the attention of the N.B.P.I. the undoubted fact that the price schedules published by the British Steel Corporation show a substantially greater increase in those products like plate and heavy steel sections where there is no competition than for special steels and similar products where they are in competition with the private sector?

Mr. Freeson: I have no doubt that the shipbuilders will draw the attention of the N.B.P.I. to that kind of representation as well as to all other views which they have on this matter.

Dungeness B Power Station

Mr. Eadie: asked the Minister of Power to what extent he expects the delay and increases in capital and generating costs now arising at the Dungeness B nuclear power station to recur in the costs of the later advanced gas-cooled reactor stations.

Mr. McGuire: asked the Minister of Power what effect he expects the difficulties now being experienced at the Dungeness B nuclear power station to have on the costs of the Hinckley Point B nuclear station.

Mr. Freeson: The Central Electricity Generating Board has assured my right hon. Friend that the recent mechanical engineering difficulties at Dungeness B are specific to that station and have no implication for the other advanced gas-cooled reactor stations.

Mr. Eadie: Will my hon. Friend agree that we hear far too much about mechanical breakdowns of power plants in this country? Would he not further agree that every time a question is asked on power stations the case is strengthened for an independent investigation into power costs, as outlined by the Select Committee on Science and Technology?

Mr. Freeson: The last part of the question has already been met by the studies which we have undertaken, and are undertaking, in the Ministry into the construction of power stations and bringing them into commission. On the implication of this question and answer and the previous question and answer on the position between nuclear power and conventional stations, it would be wrong to draw any conclusions on this because difficulties of the same kind are experienced with conventional stations and with nuclear power plants.

Sir H. Legge-Bourke: In view of the considerable attention given by the Select Committee on Science and Technology to the Dungeness B building, will the hon. Gentleman now see whether we cannot have full comments from the Government on that report in relation to Dungeness B, and, in particular, in view of the changed circumstances arising out of A.P.C. who are doing this work?

Mr. Freeson: That is another question. It is not particularly germane to the Ministry of Power and concerns a number of Departments. It is not for me to answer that question.

North Sea Gas

Mr. Eadie: asked the Minister of Power if he will give authority to the National Coal Board to plan for an

additional 12½ million tons of coal, in the light of the amended figure of the landing of North Sea gas.

Mr. Freeson: I would refer my hon. Friend to the reply I gave to him on 10th December last.—[Vol. 775, c. 198.]

Mr. Eadie: Would not my hon. Friend agree that an announcement of an increased demand for coal would do something to restore the flagging morale of miners?

Mr. Freeson: As has been said on previous occasions, and as recently as yesterday, by my right hon. Friend, there is nothing in the White Paper or in any other action of the Government which would restrict the N.C.B. from selling more coal if it is able to produce it. If it is able to go above the figures which have been forecast for the future we shall be pleased.

Mr. Lubbock: Will the Minister say whether it is possible that additional amounts of coal will be supplied to the Gas Council following the recent accident to the rig in the North Sea?

Mr. Freeson: There are bound to be adjustments from time to time irrespective of particular incidents of that kind, but we have no reason to believe that this will have a long-lasting result and that there will be a need for a change in strategy on the rundown of coal consumption in the gas industry. Quite apart from natural gas consumption, a rapid switch to oil was being made before.

Dame Irene Ward: May I ask the hon. Gentleman whether his Department will fight for any of the policies of back benchers, including making representations and fighting for us against the rise in steel prices?

Mr. Freeson: That is another question.

Oral Answers to Questions — COAL

Smokeless Fuels (Prices)

Mr. Edward M. Taylor: asked the Minister of Power what is the average price charged for smokeless fuel for domestic use in Scotland; and what is the average price in England and Wales.

Mr. Freeson: There is such variation in the prices as between different smokeless fuels, individual retailers and towns and cities in different parts of the country, mainly reflecting transport costs, that it is not practicable to give accurate averages.

Mr. Taylor: As previous questions and answers have shown that in Scotland we pay 20 per cent. more for gas and £1 a ton more for coal, is the Minister scared to find out this information because of the figures which would be revealed, and why is there not a uniform price for smokeless fuels when there are so many smokeless areas?

Mr. Freeson: I am not scared of giving information which is available. I hope the hon. Gentleman will accept that on every occasion when he has asked questions of this kind I have sought to be as helpful as possible in providing the information. My original answer stands, that there are too many wide variations in the price of smokeless fuel to give accurate averages.

Oral Answers to Questions — FOREIGN AND COMMONWEALTH SECRETARY (SPEECH)

Mr. St. John-Stevas: asked the Prime Minister whether the speech of the Foreign and Commonwealth Secretary at The Hague on 8th November, 1968, regarding European policy represents Government policy.

The Prime Minister (Mr. Harold Wilson): Yes, Sir.

Mr. St. John-Stevas: What has the Prime Minister done, therefore, towards convening the conference of Heads of European Governments which the Foreign Secretary proposed on that occasion? Will he confirm the truth of the report in The Times that he has a secret scheme for launching a federation of European countries—so doubtless he will be seeking the Presidency?

The Prime Minister: In reply to the first part of the question, the hon. Gentleman will remember that the last time I answered this question I said that this matter should be further pursued at the Luxembourg conference of the W.E.U. This conference is taking place later this week and my right hon. Friend the Foreign and Commonwealth Secretary

will be there. There is nothing to add to what I said on that point. In reply to the second part of the question, I have seen statements and speculations in a number of newspapers, starting in a French newspaper, on the lines suggested by the hon. Gentleman. There is nothing whatsoever in that speculation.

Mr. David Howell: Did not The Hague speech to which we are referring contain an undertaking to increase technological collaboration with Europe? How is this to be reconciled with the attitude Britain appears to be taking to the European airbus project as reported this morning in the newspapers?

The Prime Minister: There is nothing incompatible in the attitude which we are taking to the airbus project with what was said at the time. With regard to technological co-operation in general, the Government have always stressed that the real hope of European co-operation is in industrial technological co-operation to make us less dependent upon technology from across the Atlantic. It does not mean that we have to commit ourselves to every costly adventure in space co-operation.

Mr. Jay: Whatever we may think of airbuses, would the Prime Minister agree that the Government have no authority from this House, or indeed from the electorate, for proposing to take the United Kingdom into any sort of federal state whether in Europe or anywhere else?

The Prime Minister: My right hon. Friend will remember that when we debated these matters rather less than two years ago, I made it plain that it was certainly not our policy. These stories, stemming from an article in the French newspaper L'Express, are entirely without foundation.

Sir G. de Freitas: Is the Prime Minister aware that many of us who applauded the Foreign Secretary's speech at The Hague conference have been very much disappointed at the lack of Government initiative since then?

The Prime Minister: My right hon. Friend will be aware that immediately following that speech I said that the right place to pursue this would be at the Luxembourg conference. That takes place this week. We were not able to


have the conference earlier than the time for which it was fixed.

Mr. Thorpe: While the Prime Minister supports the speech which was made by the Foreign Secretary, may we take it that he does not associate himself with the remarks made at the same conference on the same occasion by the Leader of the Opposition, when he said that it would be wrong to seek to isolate France by creating new institutions without her?

The prime Minister: I am not responsible for the statements of the Leader of the Opposition.

Oral Answers to Questions — NATIONAL ECONOMIC DEVELOPMENT COUNCIL

Mr. Marten: asked the Prime Minister when he will next take the chair at a meeting of the National Economic Development Council.

The Prime Minister: Tomorrow, Sir.

Mr. Marten: All of which goes to show that this was a very well-timed Question. As the Prime Minister may be aware of the anxiety in this House about the non-publication of the planning document which has been discussed with N.E.D.C. will he give an assurance that it will be published whether or not there is disagreement about the content or about any other matter?

The Prime Minister: A well-timed supplementary question too. As I told the House following the N.E.D.C. conference at Chequers, it is the view of Her Majesty's Government that the document, after suitable amendment in consultation with the N.E.D.C. may well be published, but we would want to hear the views of industry about it. That is the position which I and my colleagues will take up at the meeting tomorrow. My fellows members of "Neddy" will be well aware of the strong feelings expressed on all sides of the House on the question of publication.

Oral Answers to Questions — ACCIDENTS, FIRE AND DISEASE

Mr. Archer: asked the Prime Minister whether he will take steps to coordinate the responsibilities of respective

Ministers for the prevention of accidents, fire and disease in various forms of employment.

The Prime Minister: My right hon. Friends already work closely together on these matters.

Mr. Archer: Is my right hon. Friend aware that, for the last five years for which we have figures, factory accidents rose by 60 per cent.? Does he not agree that a possible factor is that responsibility for industrial safety is divided among at least six Ministers, none of whom regards it as his or her prime responsibility?

The Prime Minister: I am aware of the figures quoted by my hon. Friend, and I share his concern. I do not believe that it is due to the various Departments concerned having other duties. It is right that their duties in respect of safety, welfare and health should be co-ordinated with their wider functions. However, my hon. Friend will be aware not only of the views expressed at the Trades Union Congress last year largely supporting his views, but that it will be our intention to take the opportunity in our proposed new safety, health and welfare legislation which is to be promoted in due course by my right hon. Friend the First Secretary of State to deal with some of these demarcation problems.

Mr. Pavitt: Does my right hon. Friend recall that successive Labour Party conferences have called for the establishment of an occupational health service? Will he call together the six Ministers with a view to implementing this proposal?

The Prime Minister: My hon. Friend will be aware of what has been said in this House by me and by other Ministers, and of the problem arising from the overall shortage of doctors. But this does not arise from the main Question where I feel that, with the resources available, co-ordination between Ministers is adequate.

Mr. Doughty: Is the Prime Minister aware that the enforcement of any regulations that exist and any further regulations that are to come depends almost entirely upon the factory inspectors, and that, in the very difficult circumstances in which they have to work, they are doing an excellent job?

The Prime Minister: Yes. I am sometimes asked about the increase in the numbers of civil servants. The hon. Gentleman should be glad to know that one reason for the increase over recent years has been the rise in the number of factory inspectors for which hon. Members in all parts of the House have called.

Oral Answers to Questions — PRESIDENT NIXON (MEETING)

Mr. John Fraser: asked the Prime Minister when he plans to meet President Nixon to discuss matters of common concern.

The Prime Minister: The House will have noted reports that President Nixon is hoping to visit Western Europe in the near future.
For our part, as I told the House last week, we should be delighted to welcome the President to London. I have had some exchanges with him on the subject of a possible visit but am not yet in a position to make an announcement.

Mr. Fraser: Does my right hon. Friend agree that one of the matters of common concern for discussion should be the maintenance of freedom in Europe? Since it is unthinkable that this Governernment should not follow the recommendation of the Consultative Assembly on the subject of Greece, will my right hon. Friend seek assurances from President Nixon that America will use her influence in doing everything possible to get a restoration of freedom in that country?

The Prime Minister: I would remind my hon. Friend that the United States is not a member of the Council of Europe, and the recommendation that he has in mind came from Strasbourg last week. That will be a matter which will have to be considered by us all. I do not think at this stage that it would be appropriate to speculate about the subjects for discussion with the President, wherever the meeting takes place.

Mr. Turton: Can the Prime Minister confirm that President Nixon will come to Britain directly after seeing President de Gaulle?

The Prime Minister: At this stage, I cannot say what the President's movements

will be. The House will have noted reports of these matters, and we are in close touch on this question. But I am not in a position to indicate a possible timetable, if the reports are finally confirmed.

Mr. Heffer: Reverting to the point raised by my hon. Friend the Member for Norwood (Mr. John Fraser), is it not clear that, while the United States is not a member of the Council of Europe, it is an essential part of N.A.T.O., and therefore it is very important that this matter should be discussed in view of the rôle of N.A.T.O. to maintain democracy? Will my right hon. Friend discuss this matter of Greece with President Nixon when he comes to this country?

The Prime Minister: Yes, Sir. My hon. Friend's concern has been supported fully by many hon. Members on all sides, and he will remember what I have said on the matter. It is too early to say whether it will be a matter for discussion with the President, and it is not usual, so far in advance, to outline the possible agenda.

Sir D. Renton: When the Prime Minister sees the President, will he reiterate the unbounded admiration felt by Her Majesty's subjects for Colonel Borman and his colleagues?

The Prime Minister: I cannot think of a more appropriate moment for the right hon. and learned Gentleman to put that question. I shall be severely out of order if I explain what I have in mind. But I join with the right hon. and learned Gentleman in expressing to Colonel Borman, who, shall I say, is visiting this country, the great admiration of all of us in this House and all of those whom we represent for the intrepid feat that he and his colleagues accomplished over Christmas and our delight at his safe return and his visit to this country.

Hon. Members: Hear, hear.

Oral Answers to Questions — GOVERNMENT ADMINISTRATION

Mr. Bruce-Gardyne: asked the Prime Minister what further proposals he has for reducing the size and cost of his administration.

The Prime Minister: I have nothing to add to my reply to the hon. Member on 5th December, 1968.

Mr. Bruce-Gardyne: Is not this the first Government in our history whose size is dictated by the need to vote down their own back benchers? Is £600,000 a year not a grossly excessive sum for the taxpayers to have to pay for this army of placemen? Will he recall telling the House a year ago that the number of civil servants must be frozen? In view of the increase of 3,000 since then, was that a lightly given promise?

The Prime Minister: I did not quite hear every refinement of the joke in the first part of the hon. Gentleman's question. It sounded suspiciously like one that I made 12 years ago from the benches opposite, though, I thought, not quite so felicitously expressed.
With regard to his reference to the size of the Civil Service, there is a Question down about that with regard both to the current year and the future year. I think that it is due to be dealt with next week, and I am looking forward to answering it. I am sure that the hon. Gentleman will look forward to hearing it.

Miss Herbison: Since the hon. Member for South Angus (Mr. Bruce-Gardyne) represents a Scottish constituency, can my right hon. Friend tell him how many of the extra civil servants are doing a useful job in attracting new industry to Scotland, and how many of them are being used to help old people in Scotland as they have never been helped before?

The Prime Minister: I would require notice of the question to give details, but an element in the increase in the number of civil servants over recent years has been the reforms carried through by my right hon. Friend when she was Minister of Social Security, with special reference to the abolition of the National Assistance Board and the introduction of a scheme for supplementary benefit.
As for attracting jobs to Scotland, I have noted some alarming statements by Opposition spokesmen both in the House and outside which suggest that they might secure a marginal saving in the number of civil servants as a result of a very sharp reduction in the effort to bring work to Scotland.

Mr. Younger: Can the Prime Minister tell us how many of these extra civil servants are employed in taking S.E.T. out of the pockets of the people of Scotland?

The Prime Minister: Not without notice, Sir. But, even without notice, I can tell the hon. Gentleman that the Opposition's alternative to that—a variant of the value-added tax—would mean the addition of 23,000 tax inspectors and Customs and Excise officers, most of them of a highly skilled level, with the certainty that there would be a much bigger increase in the cost of living than has been promoted by the Selective Employment Tax.

Mr. Arthur Lewis: In view of the correspondence that the Prime Minister has had with the hon. Member for West Ham, North—[HON. MEMBERS: "Where is he?"]—can he explain why hon. Members are now having to wait five, 10 and in some cases 12 weeks for replies to letters when they used to get them answered in two or three weeks?

The Prime Minister: For the answer to his question my hon. Friend might look at the correspondence that I have been having with the hon. Member for West Ham, North. I should make it clear that his assiduity in correspondence is equal to his assiduity in putting down Questions. However, I might perhaps inform him that, despite that, it has not led to an increase in staff. It has led only to an increase in overtime.

Mr. Shinwell: I draw my right hon. Friend's attention to the original Question about the size of the Administration. Has it occurred to him that it might save him a great deal of trouble—and even the Parliamentary Labour Party—if he increased the size of his Administration?

The Prime Minister: I am very well aware of the views of my right hon. Friend and other young members of the Parliamentary Labour Party on that matter. But my right hon. Friend, who follows these matters with very great care, will have noticed that in the mergers of the Foreign and Commonwealth Office and the Colonial Office, two successive mergers, we now have, excluding our representative at the United Nations, seven Ministers compared with ten in the three Departments under my predecessors.

Sir Knox Cunningham: Has not this Administration achieved a world record for size and for pay?

The Prime Minister: No, Sir. The hon. Gentleman will be glad to know that it


would not need a single extra Minister or a single extra civil servant to ensure one man, one vote in his constituency.

Sir Knox Cunningham: On a point of order. Is it in order for the Prime Minister—[HON. MEMBERS: "Yes."]—who is elected on the same universal adult franchise as I, to query my position when the only difference between us is that I have twice as many electors as the right hon. Gentleman?

Mr. Speaker: Order. This is interesting, but not a point of order.

RHODESIA (MINISTERIAL RESPONSIBILITY)

The following Question stood upon the Order Paper:

Mr. JOHN FRASER: To ask the Prime Minister whether he will make a statement on the changes he has made in Ministerial responsibility for Rhodesia.

The Prime Minister (Mr. Harold Wilson): With permission, I will now answer Question No. Q9.
I announced on 16th October that, following the merger of the Foreign and Commonwealth Office, my right hon. Friend the Commonwealth Secretary had been appointed Minister without Portfolio and that he would, for the time being, be available to take such Ministerial action as might arise from the talks in H.M.S. "Fearless". He so acted in the follow-up discussions in Salisbury.
Now that the immediate follow-up to the "Fearless" negotiations has been completed, I have decided that it is undesirable to continue separate Ministerial responsibility for what is an integral part of the Foreign and Commonwealth Office and, accordingly, my right hon. Friend the Foreign and Commonwealth Secretary will now have undivided responsibility for all the work of the combined offices, and he and other Foreign and Commonwealth Office Ministers will answer Questions in this House accordingly.
My right hon. Friend the Minister without Portfolio, will in future, like his predecessors in that and similar posts, carry out a wide range of duties as a non-departmental Minister, including chairmanship of Cabinet Committees, as

may be assigned to him from time to time. His great experience and knowledge of the Rhodesian problem will be available in the advice he will be free to give at all times and will be invited to give at all times to my right hon. Friend and to his Cabinet colleagues.

Mr. Fraser: Does this rearrangement mean that, in the Prime Minister's judgment, the "Fearless" terms are now not likely to be operative? In view of the extra time at the command of the Minister without Portfolio, will he be able to organise a diplomatic assault on Portugal, which is the one nation providing a block against the operation of sanctions against Rhodesia?

The Prime Minister: All diplomatic endeavour will now be in the hands of my right hon. Friend the Foreign and Commonwealth Secretary.
Concerning my right hon. Friend the Minister without Portfolio, the decision does not involve any judgment on my part in relation to the "Fearless" terms. The position is exactly as stated to the House before Christmas and, indeed, in the report to the House on the Commonwealth Prime Ministers' Conference. They are on the table, and we are prepared to have further discussions within the ambit of the "Fearless" proposals.
But I think it would be for the convenient working of the Department, with which my right hon. Friend the Foreign and Commonwealth Secretary agrees, and, indeed, of the House, that we should now end that temporary arrangement that was made. Should there be discussions at any future time, if it was thought fit, my right hon. Friend, in view of his past experience in these matters, would be free to be involved in them, but there is no immediate sign of such discussions.

Mr. Heath: While accepting that Rhodesian policy must be part of an integrated foreign and Commonwealth policy, is it really satisfactory that the Foreign and Commonwealth Secretary, with all the burdens which we know are upon him at such a time, should have to devote his attention to trying to find a solution to the Rhodesian problem?
If the Minister without Portfolio is to be available for talks at any future date, is it not more sensible for him to


keep in day-to-day touch with the situation and to use his experience and abilities creatively to try to find a solution?

The Prime Minister: It is possible that the right hon. Gentleman underrates the extent (o which my right hon. Friend the Foreign and Commonwealth Secretary has been fully involved in the Rhodesian problem before "Fearless", during the "Fearless" period and, indeed, after "Fearless". There is, and need be, no change so far as that is concerned.
I do not think that it now devolves on either of my right hon. Friends, to use the right hon. Gentleman's phrase, to try to find a solution to the Rhodesian problem. It is widely recognised that the "Fearless" terms do represent a solution available to the Rhodesians. The next move must come from them.

Mr. Paget: Is my right hon. Friend aware that those of us interested in the Rhodesian problem welcome what he has said about the Minister without Portfolio being available for negotiations when they start again, because that Minister has done a great deal to overcome the barriers of personal distrust which were one of the main troubles in the earlier negotiations?

The Prime Minister: I thank my hon. and learned Friend for what he has said. I am not indicating that if there were Ministerial talks—and there is no sign at the moment—it would be my right hon. Friend the Minister without Portfolio. But, as I have said, he would be available if my right hon. Friend the Foreign and Commonwealth Secretary felt that that was the right way in which such discussions, which are extremely hypothetical at the moment, should be conducted. He might prefer, say, one of his colleagues in the Foreign and Commonwealth Office.

Mr. Heath: May I press the Prime Minister on the impression that he has given that the Government's only responsibility is to sit still and wait for initiative from the other side? The right hon. Gentleman has stated that there are certain spheres in which the Government are prepared to consider and to work out other solutions, particularly concerning the second check on the blocking quarter and on the composition of the institutions there with the blocking quarter? Will

he, therefore, accept that it is the Government's responsibility to work for solutions in the spheres in which he agrees that alternatives can be considered?

The Prime Minister: I am not quite sure what the right hon. Gentleman is suggesting. I think that he would agree that no one could have done more than we have during the "Fearless" period, and since, to see whether there was a basis for agreement. Having failed to get that basis, we have left it on the table so that it can be picked up again. But, as the right hon. Gentleman will recall, I told the House that we offered a number of alternatives to the Privy Council form of external check in the discussions on board "Fearless".
Subsequently, the Minister without Portfolio offered another alternative form, which was not an external check but an internal check. This was dismissed at the time, as my right hon. Friend reported to the House. I feel, after some years' experience of this, not least the high hopes raised by the "Fearless" talks, that we would make more progress if, just once in a while, we received alternative proposals from the other side instead, all the time, of having to go back and say, "All right, you do not like this formulation", and regarding it as our duty to alter the formulation. If we could be told what formulation would be acceptable, we would look at it.

Mr. Winnick: Though many of us are opposed to the "Fearless" offer, may I ask the Prime Minister whether he still stands for what he said to the House a few weeks ago, namely, that there will be absolutely no further concessions on the "Fearless" offer? Also, could he clear up precisely the matter of the messages which have been coming from Salisbury? Have they been some kind of offer to the various suggestions which have come from Whitehall?

The Prime Minister: I stand by what my right hon. Friends and I have said on the matter and what was said to the Commonwealth Prime Ministers' Conference. We have always been willing to examine alternative ways of dealing with outstanding problems. Not only the external check or the extra-Parliamentary check, or whatever kind of check it is called, was causing difficulty in the talks


in Salisbury, but the Minister without Portfolio reported to the House a whole series of other vitally important problems on which agreement was not reached.
We are always ready to look at those to find alternative means. We cannot accept a settlement which is less effective in providing the guarantees of the six principles than the "Fearless" proposals. It may vary in certain ways, but it cannot be less effective, nor would the House want us to put forward less effective proposals.
It is best that the recent messages are left as confidential, but it is the case that we have had no alternative plan. I think that some newspapers in Salisbury have suggested that an alternative plan has been sent, but no such plan has been received by us.

Mr. Hastings: In view of reports that Mr. Smith is unaware, or does not accept, that any suggestions for an alternative to the Privy Council proposals have come from Her Majesty's Government, may I ask the Prime Minister to explain precisely what these are?

The Prime Minister: I am not aware of Mr. Smith being ignorant about these questions. I am not responsible for Press reports on these matters, because I reported to the House during the debate on Rhodesia, following the "Fearless" talks, a number of alternatives to the Privy Council proposals which I put forward. If the hon. Gentleman turns his mind back, he will remember what these were at the time.
Following that, when my right hon. Friend visited Salisbury in November, as he later reported to the House, he put forward yet an additional alternative, a purely Rhodesian alternative, based on a referendum of separate races. These are all alternatives. There have been a number of them. What we have not had is any willingness to consider any of them.

Mr. Thorpe: Is the Prime Minister aware that those who have a very high regard for the qualities of his right hon. Friend are relieved that he is no longer to be retained as a messenger boy between the Prime Minister and Mr. Smith? Is he further aware that many of us feel that there is no need for a full-time Minister to open the post from Salisbury

to see whether Mr. Smith wishes to persist in his rebellion, or to accept terms which, in the view of many of us, are far too generous as it is?

The Prime Minister: I thought that some of the terminology of the right hon. Gentleman's question fell a little below his usual standard, and was less than fair to my right hon. Friend, who has never been a messenger boy, but a fully responsible member of the Cabinet who was involved in the "Fearless" and the Salisbury talks, in addition to carrying a very much wider responsibility in other spheres. Nor does my right hon. Friend open the post.
In answer to the question by my hon. Friend, I can say that so far there has been no post to open.

Mr. Wyatt: Is not the Prime Minister treating the Minister without Portfolio rather badly? As he is one of the most able of the Government's Ministers, would not it be better to give him something to do, instead of standing around without a portfolio?

The Prime Minister: I know that there is sometimes disappointment among those who stand around without portfolios. I am able to assure my hon. Friend that that disappointment is not shared by my right hon. Friend, who has a very full-time job to do following the tradition of these non-departmental posts in connection with the duties which have been assigned to him.

Mr. Sandys: Am I right in thinking that the Prime Minister's earlier reply indicated that he had recently received a communication from Mr. Smith? Can the right hon. Gentleman say something about that?

The Prime Minister: The right hon. Gentleman is right in recognising that there have been Press stories from Salisbury that we have received a communication from Salisbury. I said that I did not think that it would be helpful—indeed it would be to the contrary—to the general basis on which the "Fearless" talks were conducted if I were to indicate what it said, though I read a pretty full account, under a Salisbury dateline, in one of the newspapers this morning.
Nevertheless, the position is as I have said. There has been no plan whatsoever, no alternative proposal sent to us from Salisbury. In view of the fact that there were public statements in Salisbury not long ago that such a plan had been devised, and it was even suggested that it had been sent, the House ought to know that we have not received such a plan or such proposals.

Sir Alec Douglas-Home: I should like to follow up the question asked by my right hon. Friend the Leader of the Opposition. There are at least two alternative plans to the use of the Privy Council. One is the possibility of a treaty, another is the plan lately put forward by Sir Albert Robinson, the former High Commissioner in London. May we have an assurance that these two possible alternatives are being studied by the Secretary of State for Foreign and Commonwealth Affairs?

The Prime Minister: The idea of the treaty was stated as long ago as 1965, as the right hon. Gentleman knows, just before U.D.I. We had discussions about it. It was turned down by the then Rhodesian Government, and, in any case, agreement was reached between us on one point. It is not so much the form of the treaty as what will be included in it, and the means for enforcing it. The treaty was not pursued on board the "Fearless". It was not acceptable as the alternative here.
There is the interesting proposal of the distinguished Rhodesian, referred to by the right hon. Gentleman. I think that we are getting to the point, having put forward so many proposals ourselves and tried them out, that it might be useful if we had some indication from the Rhodesians of what they might be interested in studying so that we can study it further.

Mr. Alexander W. Lyon: Who, under the new arrangement at the Foreign and Commonwealth Office, will be responsible for conveying the deep regret which we all feel at the death of one of the greatest men in Southern Africa, Dr. Eduardo Mondlane, to the people of Mozambique?

The Prime Minister: I think that my hon. Friend will rightly feel that all of

us regret the death of Dr. Mondlane, and the pursuance there, or in any other part of the world, of assassination as a means of helping to solve—if that is the right phrase—political difficulties.
The answer to my hon. Friend's question is that all these matters fall within the sphere of my right hon. Friend, the Foreign and Commonwealth Secretary.

SELECT COMMITTEE ON SCOTTISH AFFAIRS (NEWSPAPER ARTICLE)

Mr. Speaker: Mr. Emrys Hughes. A point of order.

Mr. Emrys Hughes: Mr. Speaker, I wish to draw your attention to an item of news in today's Glasgow Herald. I am not sure whether this comes under the heading of privilege. I am prepared to accept your guidance. I have given you private notice of this matter.
There is in this paper, which has a wide circulation in Scotland, a long news item entitled:
Scottish Select Committee under Fire. Fears that 'safe' Labour M.P.s will be chosen.
I do not desire to read the whole of this item, but it is to the effect that before the end of the week the Leader of the House is to announce the names of the members of the Select Committee which is to inquire into the Scottish Office. The list contains the names of hon. Members on both sides of the House who, it says, are being selected for this Committee.
I submit that if that is true it is discourteous to the House that, through a Scottish newspaper, and before the matter has been brought to the notice of the House, the names of the members of this Select Committee are made known.
It is very important that these Select Committees should, from the beginning, have unbounded public confidence. The allegation in this article is that the Committee has been packed on the Labour side by safe Members, three of whom are Parliamentary Private Secretaries. I do not wish to comment on this, but it is essential that the people of Scotland should feel confident that this Committee is not being packed with what I call Right-wing hon. Members of the Labour Party.

Mr. Speaker: Order. I am seized of the point of order, but we cannot discuss, on this point of order, the merits of the structure of the Committee. The hon. Member is calling attention to the fact that a newspaper has published an account before the House is aware of it. That, I take it, is his point of order.

Mr. Emrys Hughes: I will cut it short, Mr. Speaker.
I should like the assurance of the Leader of the House that there has been no leak from his Department or from the Scottish Office and none from the office of the Patronage Secretary. We are entitled to this assurance, so that the appointment of Select Committees will be done according to the precedent of the House.

Mr. Speaker: Order. The question of leakages or non-leakages is not a matter for Mr. Speaker, but one which the hon. Gentleman must raise with the Leader of the House.

Mr. William Hamilton: I believe that it is true that all the copies of the Glasgow Herald have disappeared from the Members' Tearoom and I understand that it has been done on the authority of a Minister of the Crown. Would you inquire, Mr. Speaker, whether the newspapers have been so withdrawn, and by whom and on whose authority?

Mr. Speaker: If the facts are as the hon. Gentleman says, I will certainly look into the allegation which he has made. I did not know that the newspaper was so popular.

Mr. W. Baxter: Mr. W. Baxter rose—

Mr. Speaker: On the same issue?

Mr. Baxter: This is another point, Mr. Speaker, with regard to the question of persons from either side of the House to sit on this Select Committee.
Is this not completely out of order, when there is an Amendment on the Order Paper to the official Motion that a Select Committee should be set up? The Amendment is in the names of my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) and myself and is more or less to the effect that the members of the Select Committee shall be appointed by Members of Parliament for Scotland. If, perchance, the report

in the Glasgow Herald is true, it would presuppose that the selection of Members for the Select Committee had been made by the Leader of the House and the Chief Whip, or the Whips' Office, and neither one nor the other of those can, or has a mandate to, speak for the people of Scotland or for hon. Members for Scotland. I would hope—

Mr. Speaker: Order. I am seized of the hon. Member's point. He must not speak to his Amendment now. He must raise this issue either at Business Question time on Thursday or when the Motion to set up the Select Committee, together with his Amendment, is before the House.

Mr. Edward M. Taylor: Before you probe too deeply into the affairs of the Glasgow Herald and this story, Mr. Speaker, would you bear in mind the principal problem which the Committee of Selection will have, that very few Labour Members for Scotland will be here for very long?

Mr. Speaker: That is not a point for me.

Mr. English: Further to the original point of order. May I suggest that you can certainly rule, Mr. Speaker, that it is not a matter of privilege for the Press to print what is obviously true? We all know that, in practice, members of Select Committees are selected, whether rightly or wrongly, by the two Chief Whips on either side. It is surely not a matter in which the privileges of the House should be raised against the Press publishing what is the truth.

Mr. Speaker: The question of privilege has not been raised with the Chair.

Later—

Mr. Emrys Hughes: I wish to raise a different point of order. You will recollect, Mr. Speaker, that when I approached you this morning I discussed with you a question of privilege. After our discussion you suggested to me that the matter should be placed before the Leader of the House, that I should inform him and that he would no doubt be prepared to make a statement. I have informed the Leader of the House and I understand that he is prepared to make a statement. May we have it now?

Mr. Peart: My hon. Friend did write to me immediately on the subject, Mr. Speaker. He is dealing with a report in the Press which I can neither confirm nor deny. In the end, the question of the appointment of hon. Members to a Committee is a matter for a Motion on the Order Paper. There is no such Motion. I shall certainly look into the matter and shall be prepared to make a statement on Thursday.

GOVERNMENT POLICY (QUESTIONS TO MINISTERS)

Mr. Shinwell: On a point of order. My point of order, of which I have given you notice, Mr. Speaker, is less controversial than the last with which you have dealt and I am not certain that it is a point of order.
I am seeking your guidance in a matter of some interest to hon. Members. It relates to Questions which are sent to the Table Office and sometimes rejected, for no doubt valid reasons.
A few days ago, I submitted a Question—I cannot discuss its merits—to the effect of asking the Prime Minister whether a speech made by the Chancellor of the Exchequer at Strasbourg last week represented Government policy. It was rejected, on the ground that, when Ministers go abroad, they obviously represent Government policy when they speak. That seems somewhat of a mystique to me, but, naturally, I did not want to quarrel with the Table Office.
Today, when I came to the House, I noticed on the Order Paper Question No. Q1, from an hon. Member on the other side, asking the Prime Minister:
… whether the speech of the Foreign and Commonwealth Secretary at The Hague on 8th November, 1968 … represents Government policy ".
I went to the Table Office and asked why my Question had been rejected. I was told—I cannot understand the distinction and perhaps you might clarify it for me and others—that, if a Minister goes abroad to the Council of Europe and makes a speech, his speech cannot be questioned by hon. Members, but that if he goes to The Hague to address another conference, which may be quasi-official, his speech can be directed to the notice of the Prime Minister, who may be asked whether it represents Government policy.
I was also told—I think that I should tell the House this—that this is not contained in Erskine May, but is the practice of the House and has been, I believe, for some time. Yet I was not aware that it was the practice of the House. As I am baffled by this distinction, would you please clarify it for me, Mr. Speaker?

Mr. Speaker: I am grateful to the right hon. Gentleman for putting his points of order so courteously. I was advised of it just before I came into the Chair, and since I came into the Chair, I have received further advice from the Table on the issue which is raised. It is quite a fine point.
I have some sympathy with the right hon. Gentleman. He wanted to ask whether a statement by a Minister at the Council of Europe represented the policy of Her Majesty's Government. It is in order, from time to time, to ask whether the statement of a Minister represents the policy of Her Majesty's Government, but if the Minister is speaking at an official body on behalf of the Government, the Table argues that obviously his speech represents the policy of Her Majesty's Government. The Council of Europe is such an official body. The difference between that Question and the Question on the Order Paper which was allowed today is that the latter asks about a statement made by a Minister at The Hague, and whether it represents Government policy. The Hague meeting, however, was an unofficial meeting.
I have a note here, which I will read to the House:
The distinction, I agree, is fine, but it is quite clear that the right hon. Gentleman is entitled to ask the Prime Minister whether public speeches made by Ministers at non-official gatherings, either in this country or abroad, such as the conference at The Hague, represent the policy of Her Majesty's Government. If, however, it is desired to ask about a speech made at an official conference, such as the Council of Europe, whose meetings are held pursuant to treaty, we must assume that the speech was made representing Her Majesty's Government. A Member cannot therefore, ask the Prime Minister whether such a speech represents the policy of Her Majesty's Government, since that is self-evident. He can, however, ask the Minister concerned directly about policy matters covered in his speech.

Mr. Shinwell: Further to that point of order. I am grateful to you, Mr. Speaker, for what you have said, but if a Minister


goes abroad to an unofficial meeting, whom does he represent? Himself? If he represents himself, who pays his expenses? If his expenses are paid by the Crown, surely we are entitled to ask Questions.

Mr. Speaker: I appreciate the right hon. Gentleman's question. But that would seem to be a reason for not asking a Minister a Question if he has attended even an unofficial meeting.

The Lord President of the Council and Leader of the House of Commons (Mr. Fred Peart): With your permission, Mr. Speaker, it might help if I comment. This is a difficult question. You have courteously looked into the matter and given your advice on the information you had received. This is a very fine point and is, I suggest, the sort of subject which should be looked into by the Select Committee on Procedure. I would certainly like that to be done.

Mr. Thorpe: Further to the point of order that has been raised and arising out of the remarks of the Leader of the House. It will be within your recollection, Mr. Speaker, that every time a Prime Minister, whatever the complexion of the Government, is asked whether the speech of a Minister represents Government policy, he always answers in the affirmative; that is, unless the Minister has been sacked before the Question was tabled, in which case matters would speak for themselves.
Since this method is used as an opportunity—a perfectly proper one—for hon. Members to seek wider elucidation of matters raised in a Minister's speech, and as this method is regularly used, I urge that the matter should be looked into, particularly since the distinction between the types of Question tabled on this subject is fairly thin.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. Question time is important and all sorts of new problems arise during Question Time. I am grateful to the Leader of the House for his comments. During the year a number of issues have been raised about Questions and I hope that the Committee on Procedure will take note of the advice of the Leader of the House and will look into

this and any other points concerning Question Time which interest hon. Members.

ROAD LICENCE FEE ALLEGATIONS (COMMITTEE OF ENQUIRY)

The Prime Minister (Mr. Harold Wilson): With permission, Mr. Speaker, I wish to make a statement.
In his reply yesterday to a Private Notice Question by my hon. Friend the Member for Lewisham, West (Mr. Dickens), my right hon. Friend the Chancellor of the Exchequer said that the implications of the allegations made by the hon. Member for Worcestershire, South (Sir G. Nabarro) that he had "irrefutable evidence" of a Budget leak were being examined so that a decision could be taken as to whether any further inquiry was needed, and, if so, what form it should take.
In view of the fact that the hon. Member for Worcestershire, South has neither withdrawn his allegations nor made available the evidence on which they were based, and, indeed is reported as having made further serious allegations, the Government have now decided that an inquiry should be made so that these charges of grave misconduct against unnamed individuals can be thoroughly investigated.
Hon. Members put forward yesterday a number of suggestions about the form which such an inquiry might take. In view of the fact that the allegations have been made by an hon. Member of this House, the Government have decided that the most appropriate way of carrying out this investigation would be to set up a Select Committee of this House.
The Motion to set up the Select Committee will be tabled after discussions through the usual channels later this week.

Mr. Heath: My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) indicated to the House yesterday that he would welcome an inquiry. As the Prime Minister made plain, the form of the inquiry, decided on by the Government and announced by the right hon. Gentleman, is the Prime Minister's responsibility.
Would the right hon. Gentleman answer three questions? First, is the Select Committee to be speedily set up, with the result that not only the necessary Motion will be laid before the House, but that, if the House so desires, it may be debated before the end of the week? Secondly, would I he right hon. Gentleman tell us what size of Select Committee he has in mind? Thirdly, will the question whether the Committee will sit in public or private be covered by the Motion, or left to the discretion of the Committee?

The Prime Minister: The right hon. Gentleman will know that we are ready to have discussions through the usual channels immediately about the establishment of this Select Committee, and to get the necessary Motion on the Notice Paper as quickly as may be, and certainly this week.
The size of the Committee is a matter for consultation. My view, though I am prepared to hear other views, is that it should not be too large and that perhaps it should be smaller than some Select Committees of the House. A membership of, perhaps, 10 or so might be appropriate; but, obviously, if it was widely felt that the number should be eight, 12, or a different figure, then that could be considered.
To answer the right hon. Gentleman's question whether the Committee will meet in private or in public, this must be a matter for the Select Committee itself to decide; that is, if the Motion setting up the Committee gives it freedom so to decide. Sometimes Committees of this sort are not free to decide, while at other times they are.
I suggest that the right thing would be, subject to consultation, that the Motion setting up the Committee should give it the usual authority to send for persons and papers, the usual authority to meet if the House is not sitting, to meet at any place of its choosing and to give it the maximum freedom of decision, whether it would hear evidence in public or in private or perhaps deliberate in private, and whether it should take any other decisions it felt right to take, having regard to its duties to the House which established it.

Mr. C. Pannell: I wonder whether my right hon. Friend can answer a question, or whether perhaps you will agree with

me about this, Mr. Speaker. This decision having been taken and announced, is not the matter now sub judice and should it not now become a matter which should not have public explanation through the means of communication, whether on the air or in the Press?

Mr. Speaker: I cannot rule that it is sub judice.

Sir G. Nabarro: While giving a general, but, in view of the Prime Minister's statement, qualified welcome to this decision— [HON. MEMBERS: "Why?"]—may I ask the right hon. Gentleman to appreciate that as I am a principal witness in the controversy I shall require that the proceedings be held in public if I am to be able to submit evidence fairly and properly. [HON. MEMBERS: "Oh?"] Will he take that into account, coming from a principal witness?
Secondly, will the Prime Minister bear in mind that the calendar unfortunately indicates that we are now within a matter of six or seven weeks of Budget day and that it would, therefore, be desirable to have the proceedings of this Committee expedited, held in public and in such a way that all of these budgetary considerations may be considered by the wider general public before the Chancellor's Budget statement?

The Prime Minister: I saw the hon. Gentleman on television last night.

Sir G. Nabarro: Good.

The Prime Minister: I am surprised and a little sorry that the hon. Gentleman has not given a general rather than what he calls a qualified welcome to what I have said.
The proceedings of the Committee, and, in particular, his question whether it will meet in public or in private, must be for the Committee to decide. The Committee will no doubt have in mind its duty to the House and also the views of the hon. Gentleman, who may, as he said, be one of the witnesses. I hope that he will make it clear that he is prepared to give the Committee his fullest assistance in its inquiries, and will not qualify that, as he did yesterday, by statements about his willingness to give evidence.

Mr. Lubbock: Is the Prime Minister aware that to use a Select Committee to


investigate matters touching the personal honour of an hon. Member has not been the practice since 1912, that the Royal Commission on Tribunals of Inquiry said in its Report of November, 1966, that the machinery was thoroughly discredited as a result of the Marconi scandal inquiry and that in future fresh machinery should be established, as was done under the Tribunals of Inquiry (Evidence) Act, 1921? Why has not the right hon. Gentleman chosen to use that machinery on this occasion?

The Prime Minister: I do not think that the hon. Member for Orpington (Mr. Lubbock) is entitled to say that this Committee is being set up to inquire into the personal honour of an hon. Member of this House. It is being set up to inquire into allegations which have been made covering a considerable number of individuals, public servants and others, and it is right that it should have full power to inquire into those allegations. Nor should any of us at this stage try to influence its final report.
I am well aware of what has become something of a convention, that because of the Marconi Committee no one any longer trusts a Select Committee of the House, we are told, to look into these matters with impartiality. But I cannot accept that view, even though it did have the authority, in one sense, of the Royal Commission on Tribunals. Indeed, there have been Committees of this House since the Marconi inquiry, which took place in very special circumstances—for example, the Select Committees which inquired into Budget disclosures in 1947 and into the conduct of an hon. Member of this House during the war.
This has been done so far as I am aware with no shred of suspicion of lack of integrity, or that it was done on party grounds. My impression, having presided over a Select Committee on very controversial matters, is that this has always been true and that the Committee on Privilege, a Select Committee of this House, does its job without fear or favour. I cannot accept the view that, because certain things happened in the Marconi case, from that time forward the House is precluded from setting up a Select Committee when that course of action is indicated.

Mr. Ellis: On a point of order. I may have misheard, but I think I heard the hon. Member for Worcestershire, South (Sir G. Nabarro) say in his comments on the Prime Minister's statement that he would be prepared to appear before the Select Committee if—and then he qualified it—it were held in public.
As I understand, that is threatening not the Government, but this House as a whole, and I understand that no individual can be above this House as a whole. As such, the hon. Member was challenging not only this House, but you who represent us in this House, Mr. Speaker. I hope that you will make quite clear that the hon. Member, when it is a matter of decision of this House as a whole and you as our Speaker, has no right to qualify it in this way.

Mr. Speaker: Order. The hon. Member is right in one thing—that no hon. Member or right hon. Member is above this House—but the matter to which he referred is a one for the Select Committee, if it is set up.

Mr. Shinwell: On a point of order. All that has happened this afternoon, although we seem to have gone beyond what happened originally, has been an announcement by the Prime Minister of the Government's intention to submit a Motion asking for the appointment of a Select Committee. I think that it is the practice of the House that we do not debate a Motion until it comes before the House, but what we are doing now is proceeding to a debate. I suggest that all that hon. Members wish to say—if they wish to say anything, from either side of the House—on the merits or demerits of the question should wait until the Motion comes before the House.

Mr. Sandys: On a point of order.

Mr. Speaker: Order. I can deal with only one point of order at a time. There is some merit in what the right hon. Gentleman has said. There is not yet a Motion that we should set up a Select Committee, but hon. Members are entitled, when a statement is made by a Minister, to ask elucidatory questions.

Mr. Sandys: On a point of order. I should like to have your guidance, Mr. Speaker. Is it in accordance with our normal Parliamentary practice for this


House to set up a Select Committee to inquire into statements made by hon. Members outside the House?

Mr. Speaker: That is not a matter for the Chair. It is a matter which can be discussed when the Motion comes before the House. I hope that we can proceed.

Mr. Woodburn: May I ask the Prime Minister whether he proposes to give the Select Committee powers to make its own investigations? The hon. Member for Worcestershire, South (Sir G. Nabarro) may have been misled by a conspiracy, as suggested in the newspapers. It would be quite improper for a Committee of this House to make investigations of that kind. Would this Committee have power to employ the necessary research to inquire whether a leak took place—if there was a leak between the Treasury and its printing office?

The Prime Minister: It must be for the Select Committee to decide its own procedure within the terms of the Motion which we shall ask the House to approve. The Committee must construe the matter and carry it out to the best of its ability.

Captain W. Elliot: Could the Prime Minister clear up this point? He will be aware that yesterday the Chancellor of the Exchequer said that there was no foundation in the allegations made by my hon. Friend. Is this inquiry to establish whether there was a leak of non-information, or whether there was a leak of vital information?

The Prime Minister: The position was as stated by my right hon. Friend yesterday. It was not accepted by the whole House, for example, by the hon. Member responsible for making the allegations outside the House. I heard him say, although not physically in his presence at the time, that he did not accept the statement of my right hon. Friend. Great publicity has been given to these allegations. It is right, in defence of those who have been the subject of these allegations, that there should be a proper independent investigation by a Select Committee. There are alternative means, such as those suggested by the hon. Member for Orpington (Mr. Lubbock), but we do not take the view that that would be the appropriate way of proceeding in this case.

Mr. Moonman: Would not my right hon. Friend agree that the reason for preferring this sort of inquiry over other methods of inquiry is the seriousness of the situation and that many hon. Members on this side of the House welcome this method without question or qualification?

The Prime Minister: That is what my hon. Friend said on television and in the letter which he sent to my right hon. Friend.

Sir Harmar Nicholls: Are we not debasing—

Mr. Faulds: On a point of order—

Sir Harmar Nicholls: I am on a point of order. Are we not debasing the coinage of Parliament? A Minister of the Crown has stated categorically that there has been no leakage. Is it necessary to inquire into every comment by a backbencher?

Mr. Speaker: Order. We cannot debate here the merits of the issue which the Select Committee will look into. I hope that we can move on.

Mr. Faulds: On a point of order. Is it in order for the House to waste valuable time on the tittle-tattle of such a self-publicist as that cardboard cavalier?

Mr. Speaker: Order. The hon. Member for Smethwick (Mr. Faulds), not for the first time, is doing what I have asked him not to do.

Mr. Winnick: Is the Prime Minister—

Sir G. Nabarro: On a point of order. You observed yesterday, Sir, that Mr. Speaker was not strange to strong epithets in the House. Would you rule now, Sir, in reference to another hon. Member as a "cardboard cavalier"? If you rule that that is in order, would it not be equally in order to talk of a broken-down actor from Stratford-on-Avon?

Mr. Speaker: Order. The ways in which hon. Members express their disapproval of each other's conduct is a matter for the Chair if they exceed the rules of order, but I do not think that I have heard anything out of order.

Mr. Winnick: Is the Prime Minister aware in view of the demolition job which


the Chancellor did yesterday it seems a complete waste of time to have an inquiry? Is it not a fact that over 22 years the House has refused to take the hon. Member for Worcestershire, South (Sir G. Nabarro) seriously?

Mr. Speaker: Order. We must move on. Mr. Hector Hughes. A point of order.

PRIVATE BILLS (OBJECTIONS)

Mr. Hector Hughes: I wish to raise a point of order on a different question from that which we have been discussing and one—[Interruption.]

Mr. Speaker: Order.

Mr. Hughes: Last Tuesday, at the appropriate time for Private Business—[Interruption.]

Mr. Speaker: Order.

Mr. Hughes: Last Tuesday, at the appropriate time for Private Business, the Brighton Corporation Bill was duly presented according to the rules of the House for Second Reading. Also according to the rules of the House, I objected to it.
Looking at HANSARD I see there is not a word about the objection. If it be the rule of the House that such objections are not recorded in HANSARD I suggest, Mr. Speaker, that you refer it to the appropriate Committee with a view to having a change made so that such objections are duly recorded. In the absence of such a record, the HANSARD is incomplete.

Mr. Speaker: I was not previously apprised of the point of order, but I have been advised on it.
As the House knows, it is often difficult, if not impossible, to identify the Member or, in many cases, the chorus of Members, who are shouting "Object" to a particular proceeding.
HANSARD does it best to record the collective objections raised to Private Members' Bills on Friday afternoon at 4 o'clock, but it is not the practice to record objections to Private legislation taken at the beginning of the day. At

that hour Bills may be opposed either by verbal objection, or by a Motion placed upon the paper under the terms of Standing Order No. 7(3), so there are two methods by which a Private Bill, as distinct from a Private Member's Bill, may be opposed. I think that this procedure is clear enough for all practical purposes.
The hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) has this afternoon made it clear to all concerned that he objects to the further progress of the Brighton Corporation Bill, and I think that he must rest content with that.

ADULT EDUCATION, ENGLAND AND WALES (COMMITTEE OF INQUIRY)

The Under-Secretary of State for Education and Science (Mr. Denis Howell): With permission Mr. Speaker, I would like to make a statement.
My right hon. Friend the Secretary of State for Education and Science has decided to institute an inquiry into adult education in England and Wales. He has come to the conclusion that this important part of the education service, which has shown considerable growth in recent years, needs a new definition of its role in a changing society. He has accordingly decided to establish an independent Committee of Inquiry to examine its purpose and structure and to make recommendations for its future development.
The Committee will have the following terms of reference:
To assess the need for and to review the provision of non-vocational adult education in England and Wales; to consider the appropriateness of existing educational, administrative and financial policies and to make recommendations with a view to obtaining the most effective and economical deployment of available resources to enable adult education to make its proper contribution to the national system of education conceived of as a process continuing through life.
I am pleased to inform the House that Sir Lionel Russell has accepted my right hon. Friend's invitation to be Chairman of the Committee. I will circulate a full list of the members in the OFFICIAL REPORT.

Mr. J. E. B. Hill: We welcome an independent inquiry into this most important field of education, which we think is long overdue. Will the Committee be free to interpret "non-vocational" in its terms of reference? Will it be able to examine some of the ground which seems to have been pre-empted by the Open University, particularly with regard to the use of television, tutorial resources, and residential facilities? Will the Committee pay regard to the provision that is being made from private and independent sources as well as Government ones, and also to the special difficulties of rural areas where the W.E.A. has played such an important rôle over the last 50 years?

Mr. Howell: I am grateful to the hon. Gentleman for his words of welcome. I agree that this inquiry is long overdue. I confirm that all the points the hon. Gentleman mentioned will be within the Committee's terms of reference.
On the special point about the Open University, I am happy to say that one of the members of the Committee will be Mr. Brian Groombridge, who is a member of the Open University Planning Committee. The importance of coordinating activity in this field with the Open University is certainly appreciated.

Mr. Murray: How long is the inquiry likely to take? As there is to be the inquiry, will my hon. Friend ask authorities such as Kent to hold back the increases in fees they are about to make of between 300 and 1,000 per cent. until Committee reports on the financial aspects?

Mr. Howell: This is an independent inquiry. Its Chairman, Sir Lionel Russell, believes that to do the job adequately and thoroughly in a field which, as the hon. Member for Norfolk, South (Mr. J. E. B. Hill) said, has not been inquired into for many years, and to get the structure and financing right, he will need at least two or three years.
We are well aware of the difficulties of the financial policies of certain local education authorities at present. These difficulties, which have come to the surface very recently, are among the matters which the Committee will be looking into. I hope that local education authorities will pay heed to the fact that there

is now to be a thoroughgoing inquiry into the whole service.

Sir S. Summers: Will the Minister, for the purpose of his statement, define "adult"?

Mr. Howell: Parliament itself is about to do that in legislation which is shortly to be put before it.

Mr. Park: Does my hon. Friend agree that adult education has been a most successful and expanding service in recent years? Is he aware in particular of the contribution to the improvement in industrial relations which has been made, and which will continue to be made, by such bodies as the Workers' Educational Association and university extramural departments in their provision of educational courses for trade unionists?
Will my hon. Friend bear in mind the need for this Committee to take an expansionist view of its responsibilities and not to allow itself to be used for false economy measures which could do a great deal of damage to the whole service?

Mr. Howell: The whole purpose of the inquiry is to establish the importance, as the Government see it, of the service as a whole. I am happy to say that there has been a considerable growth in the service and particularly some very exciting opportunities occurring for adult education in the whole field of industry, especially the education of trade unionists in the processes of management. Therefore, my right hon. Friend the Secretary of State has specifically appointed four members who have special regard to this matter—Mr. Jim Conway, General Secretary of the A.E.U., Mr. John Marsh, Mr. Clifford Barclay and Sir Alfred Owen.

Mr. Geoffrey Lloyd: Will the Under-Secretary note that the fact that Sir Lionel Russell is to be Chairman of the Committee will give great satisfaction?

Mr. Howell: I am obliged to the right hon. Gentleman.

Mr. McNamara: I welcome this statement, but will my hon. Friend define more specifically the phrase "non-vocational", because many people would say that there is no distinction between the


various types of education? While agreeing that there is an important part to be played in training people for leisure in the future, the phrase "non-vocational" tends to suggest that there are unnatural limits in education, where, for example, a business course could be extremely vocational but also extremely educational.

Mr. Howell: The interpretation of this part of its terms of reference will be a matter for the Committee's common sense. The House will readily understand that it was necessary not to have an inquiry ranging over the whole field of technical education. Therefore, it was thought best to exclude from its terms of reference that part of the educational service.

Mr. Lubbock: Is the Under-Secretary aware that in some local education authorities the most savage cuts are being made in the adult education service, out of all proportion to the cuts being made in other services, in an effort for the authorities to meet their financial responsibilities? If this process continues, there will be nothing left for Sir Lionel Russell and his Committee to inquire into. Therefore, will the hon. Gentleman impress on local authorities that they should not make savage economies in this service at a time when the Committee is about to begin its investigations?

Mr. Howell: I am obliged to the hon. Gentleman for making that point. I fully support him and greatly regret the savage cuts which have been made in certain areas. In fairness to the education authorities, it is right to say that the authorities that have thought it right to make, to quote the hon. Gentleman, savage cuts, are in a very small minority. This is a good opportunity to remind local education authorities of their overall responsibility for education as a continuous process throughout life, that being the concept of the 1944 Act, under which they operate.

Mr. Coe: While not going right across the whole technical field, will my hon. Friend expand on what he means by the fields which he would like to see the Committee tackle?

Mr. Howell: This is not the time for me to give all my views on the matter. Indeed, it would be improper, since we

have appointed a Committee to advise us. However, I should have in mind three great areas of activity in which there ought to be considerable expansion and effort, and it is my personal hope that the Committee will look at them. One is the whole range of adult education in industry. Another is the tremendous growth of interest, particularly among women and housewives, in the possibilities of the adult education service. The third is the new and important service beginning to emerge in education for retirement and the opportunities which it can offer to retired people.

Mr. Lane: I welcome the inquiry, but is it not yet another reason for deferring plans for the Open University, at least until the Committee has reported?

Mr. Howell: No, Sir.

Mr. Roebuck: If it is the fact, as my hon. Friend the Member for Gravesend (Mr. Murray) and the hon. Member for Orpington (Mr. Lubbock) have said, that local authorities are cutting down savagely on education grants, cannot my hon. Friend suggest that they would do a far better job if they cut down on some of the grants for the roistering, guitar-strumming students of the London School of Economics rather than cut down on the educational opportunities being offered to decent taxpayers and ratepayers?

Mr. Howell: I do not think that I should be drawn into that argument.

Following is the list of members of the Committee:

Sir Lionel Russell, Chairman, former Chief Education Officer, Birmingham.

Mr. Clifford Barclay, banker, industrialist, currently President, British Film Producers' Association.

Mr. Jim Conway, General Secretary, Amalgamated Union of Engineering and Foundry Workers.

Mr. R. D Salter Davies, formerly Chief Inspector, H.M. Inspectorate.

Mr. R. T. Ellis, Colliery Manager, Wales.

Mr. Brian Groombridge, Education Officer, Independent Television Authority; Member, Open University Planning Committee.

Mr. David Heap, Dentist, former Secretary, National Union of Students.

Mr. J. W. Henry, Chief Education Officer, Salop.

Mr. H. D. Hughes, Principal, Ruskin College, Oxford; Vice-President, Workers' Educational Association.

Professor H. A. Jones, Vaughan Professor of Education, University of Leicester.

Mr. John Marsh, Director General, British Institute of Management; Member, Albemarle Committee on the Youth Service in England and Wales.

Ald. Mrs. E. W. Mitchell, Member, Northumberland County Council; formerly Chairman, Northumberland Education Committee.

Dr. Elizabeth Monkhouse, Senior Staff Tutor, London University Extra Mural Department; co-opted Member, Civil Service Council for Further Education; Vice-Chairman, Governors of Kingsway College of Further Education.

Sir Alfred Owen, Chairman and Joint Managing Director, Owen Organisation; Pro-Chancellor, University of Keele; formerly Chairman, Staffordshire County Council.

Secretary

H.M.I. Mr. C. W. Rowland, Department of Education and Science, Richmond Terace, London, S.W.I.

BILL PRESENTED

HOUSING (LOCAL AUTHORITY CONTRIBUTIONS)

Bill to make provision for the payment by local authorities out of the general rate fund of contributions in connection with the provision of housing accommodation; and for purposes connected therewith, presented by Mr. Alfred Morris; supported by Mrs. Braddock, Mr. Will Griffiths, Mr. Laurence Pavitt, Mr. Arthur Davidson, Mr. Will Howie, Mr. Michael Foot, Mr. Kenneth Marks, Mr. Arnold Gregory, Mr. Ivor Richard, Mr. Eric S. Heffer and Mr. William Hilton, read the First time; to be read a Second time upon Friday, 14th February, and to be printed. [Bill 77.]

FILMS (STATUTORY DEPOSIT)

4.31 p.m.

Dr. David Kerr: I beg to move,
That leave be given to bring in a Bill to require the deposit of certain copies of moving pictures in the National Film Archive of the British Film Institute.
I hope that I shall have the sympathy of the House, after this rather long wait, if I am more likely to give a sigh of relief than make a sparkling speech.
The Bill would endow the British Film Institute with a statutory power to acquire for deposit in the National Film Archive any film selected as suitable for that purpose. The growth of interest in the film as a medium of artistic expression as well as a document of social and historical importance has been one of the most remarkable features of the artistic world in recent years, and it has done something, though not nearly enough, to rescue the film from the commercial and aesthetic depression of the post-war years.
The film is essentially a popular art form, perhaps the most popular. The British Film Institute, with its National Film Archive, has played an integral part in promoting the film as an art form, by studying methods of storage and by introducing new scientific and technological methods of preserving film. It has a national and international reputation which, unfortunately, is not paralleled by a public appreciation of its work, despite the fact that it costs the taxpayer about £90,000 a year.
The aim of the Archive was stated in 1935, when it was established; it was to be responsible for film records and to maintain a national repository of film. The aim was redefined more broadly, and more recently, as being to maintain and develop a permanent national collection of moving pictures from all sources shown in Great Britain of lasting value to the study of film art and its development and as an historical record of every aspect of contemporary life and behaviour.
Unfortunately, the Archive is frustrated in this work and in its aims by its failure to acquire the films which are selected. Only one feature film in five shown in this country is thought suitable


for deposit in the Archive, yet the records over the past 10 years show that of about 1,000 feature films which were selected for deposit, only 286 have been acquired: from the United Kingdom, 126 out of 237; from the United States 110 out of 360; and of Continental and other films which come to this country because they are, broadly speaking, of high quality, only 50 out of 401 have been acquired for the Archive.
Nearly all the films which are deposited at present are donated by the film industry. I must speak plainly here: if all the film industry were as good, as far-seeing and as generous as the best, there would be no need for me to be speaking today. But of the 286 films which have been received, thanks to the generosity of a section of the industry, a large proportion are old used prints no longer suitable for commercial exhibition. The Archive faces problems of maintenance and examination, and of maintaining a bureaucracy for cataloguing and retrieval. The deposition of new films of mint quality would relieve the Archive of much of this burden.
The Bill would give the British Film Institute the right to require for the Archive any film selected from among those which have received public exhibition. The selected films would include not only films ordinarily so called but television material as well. Further, it would be an important principle that the British Film Institute itself would undertake to pay the cost of preparing the copies for deposit.
I stress that the Bill, if it becomes law, will in no way intrude upon the copyright of owners of the films nor in any way infringe the possibilities of commercial exploitation. There would be no difference from the arrangements which now apply to the deposit of film on a voluntary basis. Second, the cost of preparing the prints would fall in the first instance on the British Film Institute. It would not fall on the Government or on the taxpayer.
I must in fairness quote from what the Estimates Committee said in its recently published Report reviewing the work of the British Film Institute. It said:
Your Committee would not consider the introduction of a payment for the right to

acquire a single archive copy an appropriate solution to the problem.
and it added:
At present your Committee could not recommend the allocation of part of the existing scarce resources to this task, though in improved economic conditions they would welcome reconsideration of the question.
I have quoted those words in fairness to the House. I wish to make plain that the British Film Institute recognises the difficulty which my Bill might impose for a time on the process of archiving. However, I emphasise that there are difficulties already, and it is not envisaged that the passage of the Bill would do anything to increase them. Moreover, the actual cost of archiving on a 100 per cent. selected basis—that is, if we received all the films selected, not if we took all films which were shown—has been estimated at its maximum to be £150,000 a year, slightly more than 1 per cent. of our national expenditure on all gallery and museum activities—not, I suggest, even if it were to fall wholly on the Government, an entirely disproportionate amount.
The industry has expressed fears that the cost might be made to fall on its side, through, perhaps, the National Film Finance Corporation or the Eady Fund. This is not the intention. There are alternative sources open to the Institute upon which it could call. Second, even to maintain the present level of deposit would mean a cost not of £150,000 but of £20,000 a year.
In the long run, it would still be open to the Institute not to select any films for archiving if it found that it had not the necessary resources, and there is, as I say, the possibility of deriving financial support for this important purpose, which has a commercial significance, from such sources as television and even on a voluntary basis from the industry itself.
The Bill would not solve all the problems facing the Archive, but it would begin to solve one of the most pressing which faces the Archive and the nation as a whole. I hope that the passage of the Bill and the debates which, I trust, will take place on it will encourage a more positive attitude by the film industry and by television. In this respect, I am much encouraged by the failure of the industry to express any opposition to the terms of the Bill as I have brought it


to the House. We need to serve not merely the film-going public but tele-viewers too, and, above all, we must have in mind the need to serve the social historian 50 years hence.

Question put and agreed to.

Bill ordered to be brought in by Dr. David Kerr, Mr. Hugh Jenkins, Mr. Lubbock, Mr. Ryan, and Mr. Strauss.

FILMS (STATUTORY DEPOSIT)

Bill to require the deposit of certain copies of moving pictures in the National Film Archive of the British Film Institute, presented accordingly, and read the First time; to be read a Second time upon Friday, 18th April and to be printed. [Bill 78.]

Orders of the Day — CONSOLIDATED FUND BILL

Order for Second Reading read.

Motion made, and Question proposed, That the Bill be now read a Second time.

INVESTMENT GRANTS

3.41 p.m.

Mr. A. P. Costain: I am fortunate in having been selected by Mr. Speaker to raise the question of anomalies in investment grants. I must declare an interest. I am a director of a firm which has manufacturing factories; a director of a firm of civil engineers; a director of a firm of builders; and a director of a firm of hotels. All of them are affected. According to Mr. Speaker's Ruling of 26th March, 1968, I am prohibited from raising any questions of taxation and legislation, but I am permitted to raise questions about administrative policy. This, of course, restrains me from asking the House to refer to bringing back the investment allowances, but it allows me to point out that, when investment grants were substituted for investment allowances, the House was told that they would encourage investment in selected industries and in specific assets.
The grants give great power to the Board of Trade, which has produced a booklet, "Investment Grants: A Guide for Industry". I see that the Minister of State is equipped with a copy. We are used to white papers and green papers. This document is orange, while the first document produced by the Board of Trade was yellow. The way things are going, I prophesy that the next one will be red.
The booklet can be obtained from any Board of Trade office. It is free—and all in industry can obtain it. But, like everything else in commerce that is free, one gets exactly what one pays for, and I congratulate the staff of the Board of Trade on producing the booklet in this colour. The Board of Trade must have a sense of humour, because this is neither stop nor go. However, under this Government, the Department's civil servants need a sense of humour.
I should also explain that, in private industry, before anyone embarks on any new project or any capital expansion, the first thing to do is to find out what the cost of the expansion will be. Unlike Government Departments, which can make an estimate and then double it and treble it during the Parliamentary year, commercial firms have to make an accurate estimate. If they did not, they would go bankrupt.
I can produce no better evidence than this booklet to show what is wrong with the system. I draw the Minister of State's attention to page 7, which says:
It is hoped that the booklet will help firms to know, in advance of submitting claims, to what extent their investment expenditure is likely to be admissible for grant.
It goes on, cleverly:
This booklet will be revised from time to time in the light of experience does not have legal force.
This is why I claim that it is a yellow document that gives no real information at all.
Secondly, we know from experience of what has been happening since the operation of the Act that an applicant has to wait up to nine months after spending the money to know whether he is eligible to get his grant. The Estimates Committee, on which I recently had the privilege to serve, heard evidence that over 195 cases dating back to 1966 were submitted to the Board of Trade as late as last November.
We can go further with this booklet. I refer the House to page 12. This is a most interesting page, because the Board of Trade has substituted a flyleaf for the original. I have done my best to see what secrets there are under it, but have not found out. Perhaps it is not a good time to do it for the moment, anyway. But it is evident that someone realised that the Board of Trade was giving too much away, had a sudden panic and ordered a flyleaf to be put in. The evidence of the hurry is that in paragraph 29 even the spelling is wrong. It says:
The Board will consider whether it will be cosnistent …
I presume that this is meant to be "consistent". The misspelling shows the panic with which the document was prepared. The flyleaf says:

Grants will not normally be paid on manufacturing equipment whose use is subsidiary to or forms part of a non-qualifying process …
The first example is
… a lathe used in a repair shop or garage;
When is a repair shop not a repair shop? When is a garage not a garage? I have a garage in my constituency, Martin Waters Limited, which manufactures and has a successful export trade. Is its work to be regarded as not qualifying for grant? The next exclusion is
a saw for cutting wood at a timber merchant's yard;
What is the difference between a timber merchant's yard and a joinery shop, and why has it been decided to exclude this one miserable saw? Quite often, timber merchants' and joiners' shops are adjacent.
This special page which has been stuck on goes further. It excludes
printing equipment for use in office activities,
I wonder what that means. If a company buys a printing machine and prints a circular about office hours, will grant on that be allowed? I wonder what happens if the same printing machine prints a notice board for the works. Is that office equipment or manufacturing equipment? I remind the House that this booklet is supposed to clarify matters.
The next item excluded is:
kitchen equipment in a restaurant or hotel,
But that is obvious. We know that, ever since the Government came to power, they have a sort of yen against the hotel and restaurant business.
The Government went out of their way to cripple this industry with all forms of taxation; but I would be trespassing on your generosity, Mr. Deputy Speaker, if I said anything further about that. The anomaly of this is that if a manufacturing process cooks food and the manufacturer supplies it to a restaurant, the grant becomes payable. We have had cases in Scotland of two adjoining restaurants, one with a bakery attached, the other without. The restaurant with the bakery receives the investment grant and the other does not. This is the sort of fair competition the Government want to help investment and improve production.
I assume, although I have not checked it, that if a firm of caterers such as


Lyons was to cook its food at Cadby Hall it would get its grant, but if it cooked food at the Cumberland it would not.
Let us look at the industry about which I, perhaps, know most, the construction industry. This is dealt with in some detail in chapter 4, page 14 of this explanatory booklet. Paragraph 36 explains what will be allowed in civil engineering and building. It says—a quite remarkable statement:
Ordinary repair or maintenance of buildings or structures is not a qualifying activity and"—
believe it or not—
machinery or plant used solely for this is not eligible.
What a shaft of light is such a booklet! Who can possibly say what type of building equipment is used exclusively for maintenance, unless it is that used by the small builder who does nothing but maintenance? Every large firm carries out maintenance from time to time. What is the difference between alteration and maintenance? Is this building in which we are sitting being maintained or altered? How can anyone define it? Yet the Board of Trade, in this helpful document, says that it should be excluded.
It would need an army of civil servants in the building industry to work out such details. The only person who suffers is the small builder, who does nothing but maintenance. This, from the Government about to introduce a Bill for maintenance of houses in twilight areas. They make it difficult to get grants. Paragraph 38 deals with development areas and says that
Construction equipment which is provided for continuing use in a development area is eligible for grant at a rate for those areas, but if it is used outside development areas at any time during the first three years from the date when expenditure was incurred in providing it, the fact must be reported to the Board of Trade, who may require repayment of … some of the grant.
What do we mean by "development area"? Development areas are areas of local employment exchanges, which generally follow the pattern of local authorities. Many of the boundaries of such local authorities were settled in the times of the Domesday Book. We can blame our forefathers for quite a lot, but we cannot blame them, when they drew up the boundaries, for not seeing that the Government would use them for taxation

purposes. Even if boundaries were in a straight line, as in Canada and Australia, there would be problems enough. Boundaries in this country wander round, and this can make the building of motorways, normally built in a straight line, rather difficult.
The Government are, quite rightly, building motorways, not enough, which cross these hypothetical boundaries. We are not talking about small equipment here. The sort of equipment used on motorways costs millions of pounds. This document, this flash of light, tells us that if the equipment is bought in a development area, and works entirely within that area, a 40 per cent. grant is paid. Should it cross the boundary, then the Board of Trade should be notified.
In building a motorway, a contractor moves millions of yards of material across these mythical boundaries. Soil is moved from a development area, into a non-development area, and then back again. Is an industrialist to have an army of flagmen blowing whistles and timing the intervals when equipment is used outside of a development area? Are the Government to establish a body of civil servants to calculate this?
The booklet goes on to say that this applies for only three years. No one knows why, and it will lead to some interesting situations. Some contractors might take a job outside a development area, which confuses the calculations. What happens then? The most extraordinary things can happen. If one is writing-off a very large crane, as opposed to a small piece of equipment the situation is near absurd.

The Minister of State, Board of Trade (Mr. Edmund Dell): So that I may be clear what argument it is that the hon. Gentleman wishes me to reply to, will he make it clear whether he is arguing against having a differentially higher rate of grant in development areas?

Mr. Costain: I am not arguing against the differential grant in development areas, because the Government have agreed on a policy of additional grants. I am asking that a certain amount of common sense should be put into these regulations. I hope that the Minister will feel at liberty to intervene again, if there is anything he is not clear about.
In writing-off, a situation can arise when it is not worth taking a piece of equipment out of a development area, near the end of its life. What will the attitude of the Board of Trade be if the plant is not working, and remains in a development area? I would expect that, good guardians of public funds that they are, they might say, "No. You have to work outside the boundary area". But some of this big plant takes a month or two to repair. Is it right that it should be repaired in a repair shop in a development area which does not qualify for the grant?
The Government are pressing the civil engineering and building industry to export. I can say without fear of contradiction that we are doing our very best in that connection. But, having got the plant with the help of these grants, the moment we respond to the Government's appeal to export, the grant goes; it is taken away. Instead of having this wonderful asset to help exports, the Board of Trade says, "No. We might be subsidising exports". There are very few nations, except perhaps Germany, which are not subsidising exports.
Recently, the previous Parliamentary Secretary to the Ministry of Public Building and Works, Lord Winterbottom—a name which is easy to remember—made a speech on the necessity for builders to equip themselves for building in winter conditions. He made such an appeal to the builders that they responded and got on with buying equipment, including heating equipment. We in the building industry are sufficiently naïve to believe that whatever the Minister in charge says is put into effect.
However, when this equipment was purchased and it came to the question of allowing it for grant—and the gestation period between buying it and knowing whether one will get a grant in respect of it is nine months—the builders were told, "No. That is welfare". Apparently, heating a building to keep out the frost so that one can get on with laying bricks is welfare. The Government talk a great deal about welfare, but when it comes to paying for it, that is another story. The Blue Book makes it clear that welfare is excluded.
I refer to the evidence given before the Estimates Sub-Committee, on which

I have the privilege of serving. I am delighted to see the Chairman of the Sub-Committee present. We carried out an inquiry into an excess of expenditure on investment grants which is dealt with in the Winter Supplementary Estimates. The increase above the Estimate is 11 per cent.—£45 million. This followed a 39·4 per cent. increase the year before. I do not blame the Board of Trade officials for their inability to give an accurate estimate. But I should like to congratulate the author of the paper which was put before the Estimates Sub-Committee; it was a masterpiece. It explained why the Estimate was not accurate.
Paragraph 5 on page 49 of the First Report of the Estimates Committee, Session 1968–69, reads:
It seems clear to us that given the nature of the scheme there will inevitably, even with longer experience, be a number of uncertain factors at the time when the main estimates are prepared. These could all move in one direction, leading to an over-stated or an under-stated estimate, or they could cancel each other out in whole or in part".
Was there ever a clearer statement to the effect, "We do not know what we are talking about, but we will put it in writing". The man who produced that should be made Leader of the House.
The argument which I am developing, be it very unsuccessfully, is that, as these Estimates increase, pressure will be brought to bear to disallow items which have previously been allowed. I have evidence relating to a firm with two factories, one in Scotland and one in England. It had items allowed for investment grant. On the next occasion, they were disallowed in England but allowed in Scotland. Then the Scottish and English got together, for a change, and they were disallowed in both cases. By that time the investment programme had gone on. We become suspicious about these matters. In view of these overestimates, is it possible that the Board of Trade is under instructions from the Treasury to cut down?
In Question 289, one of the officials of the Board of Trade was asked
whether there is any pressure from the Treasury on the Board of Trade to have a time limit from the point of view of the demand-management of the economy?".
The answer was:
There has been no pressure from the Treasury on this particular point. The Treasury


are, of course, concerned about the total cost of investment grants and this is one reason why the-e has been no further progress in the past year towards shortening the period of delay between expenditure and grant.
If anything lets the cat out of the bag, that does. It is clear that, having made these promises in order to get popularity, the Government are, once again, trying to get out of their promises and commitments and are using the clammy hand of the Treasury as a reason for the delay.
I hope that the Minister of State does not believe that I am putting forward a political argument. I am looking at this matter as an industrialist. I should like to refer to a recent study of taxation which most hon. Members have received in the last few days. It is Study No. 3, by the Industrial Policy Group, which is composed of leaders in industry, into how we may get the economy going, help exports and stimulate the economy but cutting taxation.
These are a few of the scathing remarks made about investment grants. On page 42, it says:
We now turn to the system of investment grants which, though not formally a part of the taxation of business income, is intimately connected with it. The present system is another of the innovations hastily produced in 1965–66. It has the following major defects:
It discriminates between manufacturing and other industries. This is not only wrong in principle. It is impossible to apply in practice without numerous anomalies arising from the difficulty of defining manufacturing. It is wrong in principle because the distinction between manufacturing and other industries is not a distinction between industries in which it is desirable to stimulate investment and those in which it is not.
That is a summary of what I have been saying about the difficulties.
It goes on:
Its administration is, and must be, costly owing to the need for bureaucratic decisions on what may or may not qualify for benefit.
It is uncertain. There are investment decisions which have to be made before it can be definitely known whether investment grants will accrue or not, owing to problems of definition. Uncertainty is in itself a deterrent to investment.
The message I want to leave with the House—

Mr. Dell: As I understand, the hon. Gentleman has been arguing that it was a regrettable thing that further progress

had not been made in reducing the period before which investment grants were paid. He now appears to be arguing with the Industrial Policy Group in favour of a return to industrial allowances. How does he reconcile these two positions, taking into account that investment allowances cannot be paid in less than 18 months as compared with the present 12 months for investment grants?

Mr. Costain: I am grateful for the interruption, since it shows how inadequately I have argued my case. I did at the start say that I was prohibited by the rules of the House from speaking about investment allowances, and your nod, Mr. Deputy Speaker, led me to believe that I must not trespass further on that matter.
The Minister has missed the most important thing. What is wrong is the definition. If a firm knows that it will get an investment grant, the bank can be told, "In spite of the Government's squeeze, in spite of the rude noises which the Chancellor of the Exchequer is making to you, we have this profit of so much and we know that we will get a refund." If the firm tried that on now, and went to a bank and said that the Government had promised the firm an investment grant, the bank would say, "Which Government?" "Which grant?" "Where is it in the book?" There is no book; and the bank manager will not give overdrafts on promises. This is the difference.
If investment grants are to work, the Board of Trade must in all decency produce a schedule of what it will allow and what it will not allow. There has been time enough since 1966 to prepare a schedule, so that industrialists can go ahead with expansion in the knowledge that a grant will be paid. Until the Board of Trade puts that right, the country will never get the benefit which it should get out of investment grants.

5.15 p.m.

Mr. A. H. Macdonald: The hon. Member for Folkestone and Hythe (Mr. Costain) is in a fortunate position since, as he remarked and as you confirmed, Mr. Deputy Speaker, it would be out of order to refer in any but the most oblique manner to the circumstances that prevailed before. He has, therefore,


been able quite comfortably to indulge in all his invective against the investment grants system in a vacuum, without being able to make comparisons.
With all respect to the hon. Gentleman, following the intervention of my hon. Friend, I would remind him that he did carry on about the length of time that it takes to pay investment grants, and I fully take his point. He spoke about the length of time, and it would have been reasonable to make an oblique reference to the length of time that prevailed before.
The hon. Gentleman referred in some detail to the evidence which was presented to the Estimates Committee. I also had the privilege of serving on that Committee and, though the quotations which he made were absolutely accurate and apposite, they also were just a wee bit selective. He might have referred to some of the other questions which were put to the witnesses which indicated that the system of investment grant offered a measure of control. The matter is now before the House because we have this system. Under the previous system it could hardly have been brought before the House, but I will not elaborate on that point. The fact that we are discussing the matter now stems entirely from the introduction of the present system.
The hon. Gentleman, having been a member of the Committee, will recall that witnesses replied to questions by stating that the investment grants system enabled a more accurate method of control to be established than that which existed previously; it enabled hon. Members to put questions about the way public money is being spent in a way which could not have been done before, These comments are to be found in the Report and in the supporting evidence, but no reference was made to this in the speech by the hon. Gentleman.

Mr. Costain: Will the hon. Gentleman say to which question and to which evidence he is referring? This would help me to follow his arguments more carefully.

Mr. Macdonald: I was thinking of Question No. 303 on page 44 of the supporting evidence. The point I am anxious to make, treading as carefully as possible to avoid referring to the previous system, is that the advantages of

the present system can be established only after it has been working for a reasonable period. Even if I wanted to make a comparison with the previous system, which I accept would be out of order, it would not be possible to do so because the previous system provided no statistics on which a comparison could be based.
There is some evidence, though of a slightly doubtful nature, to suggest that industrialists paid very little attention to the previous system. The hon. Gentleman is an industrialist and will no doubt have seen the booklet called "Investment Appraisal" which was published a few years ago and which showed something on these lines. The evidence I have does not suggest that the uncertainty of business and industrial firms on which he dilated at such length is significantly greater now. This is why it is all the more unfortunate that the hon. Gentleman proceeded, as he was obliged to do, in a vacuum, without reference to what had gone before.
He might have referred to some of the advantages of the present system. I remember most distinctly discussing with a group of businessmen and industrialists the system of investment grants with particular reference to the concept of rental. I suppose that we are all agreed that the concept of renting equipment should be encouraged. It enables a more effective use of plant, and it enables the use of expensive and specialised plant.
I do not want to elaborate on it in great detail, but it is common for the company engaged in renting out equipment, through some quirk in our system of accountancy, very often to show in its early years an apparent loss in its accounts. It is not a real loss. The profit is there in the future, but it is one which is to come, and it does not appear in the accounts for the early years. The only item featured there is the written-down capital value of the equipment and not, except in rare cases, the capitalised value of the rental contracts. For that reason, it is not unusual for the balance sheet of a company engaged in renting out equipment to show a loss.
Under the old system, no advantage was gained, but, under the system of investment grants, such a company can qualify for grant and receive it. As rental is an aspect of industry which


we wart to encourage, it seems that the system of investment grants is admirably adapted to doing this, and that was the response which I obtained from a group of businessmen whom I addressed in the course of the 1966 General Election campaign. They said that they saw manifest advantages in the system. They were not alarmed at the prospect of uncertainty, because they saw no more uncertainty than existed before. Equally, they were not alarmed at the prospect of delay, because they saw no more delay than existed before.

Mr. Costain: The hon. Gentleman is putting over a powerful argument about the renting of equipment, and he has just referred to conversations that he had in 1966. However, does he realise that if a contractor rents equipment his grants are not allowed? Quite a lot of building firms inter-relate equipment, but, as soon as it is rented out, the grant goes.

Mr. Macdonald: That was not quite my argument, but, if the hon. Gentleman had confined himself to the point that he has now made, I would have felt inclined to support him. Although the system of investment grants assists the renting out of equipment, it could do more than it does, and I should like to see an expansion. If the hon. Gentleman had proceeded on that point, I would have been pleased to support him.
However, following up his remarks, I wonder if it is entirely true that in some circumstances a grant is payable. Manifestly, it is not possible to get two grants. The company hiring equipment cannot get a grant if the company hiring it out has one, and there are cases of the company hiring out equipment getting grant and the company using equipment gaining benefit from it because the hiring company has been able to quote attractive rental terms.
I would not like it to go entirely unremarked that there are distinct advantages in the present system of investment grants, but the arguments advanced in their favour in the Report of the Estimates Committee did not emerge fully from the hon. Gentleman's speech.

5.24 p.m.

Mr. Nicholas Ridley: In answer to the hon. Member for Chislehurst (Mr. Macdonald),

I want to make it clear that I am against both investment grants and investment allowances. For me, there is no question of a choice between the two. In my view, the whole system of subsidising investment is getting us into deeper and deeper water.
To begin with, I must declare the same interest as my hon. Friend the Member for Folkestone and Hythe (Mr. Costain). I, too, am a director of a civil engineering contracting company, and a competitor of his in some contracts. That means that it does not matter to competitors whether or no they receive investment grants, provided that they are all treated alike. But if I, as a development district based contractor, am to compete with my hon. Friend, as a non-development district based contractor, the competition becomes unfair. My hon. Friend receives 20 per cent. on his plant, whereas I get 40 per cent. I can assure the Minister that his inspectors do not follow my every wheelbarrow in its perambulations round the countryside, in and out of development districts.
There are other anomalies. One arose in my constituency where a firm making plastic mouldings was in the habit of treating the moulds as the property of the customer and, although the customer sometimes invested heavily in those moulds, they were refused investment grants on them. The problem has now been resolved satisfactorily, but there is no limit to the number of anomalies which other hon. Members can bring to the Government's attention.
I want to devote a moment or two to the development district concession of 40 per cent., as opposed to 20 per cent. It was one of the reasons for the very large increases which the Select Committee investigated. It will be known that the original guess was that about 20 per cent. of the money would go to the development districts and that this has had to be revised to 33½ per cent. If my arithmetic is correct, that amounts to £100 million in extra subsidy to the development districts.
It is highly questionable whether it is right to discriminate in favour of the development districts to the tune of £100 million a year of public money by making investments in capital-intensive industry.
As I understand it, the problem in the development districts is the shortage of employment for people. It is curious to spend so much money on providing capital intensive and, therefore, labour scarce employment. This has been recognised by the Government, who have brought in the regional employment premium, designed to redress the balance by subsidising labour. However, the two together are now costing us something in the region of £200 million a year—£100 million for capital and £100 million for labour. I suggest that it would have been easier to have abolished both, thereby saving £200 million a year.
The Department of Economic Affairs has always denied that these two large items, investment grant and regional employment premium, should be included in my calculation of the cost per job in the development districts. But the Prime Minister has said that the cost has gone up from £18 million a year to £250 million, which means that we are now spending £8,000 per job in the development districts by including them.
The time has come when this spiral of expenditure must be stopped, and this House is entitled to ask for value for money in the matter. The Chancellor said yesterday that private consumption must be curtailed and that public expenditure is on target and nothing but good. I do not know what this target is. It has gone up by 50 per cent. since Labour came to office, from £9,807 million to £14,500 million. But we have a glorious example of public expenditure which could be cut by £425 million a year in investment grants.
If I might quote to the House the figures which the Estimates Committee investigated, they are very revealing. Originally, in 1967–68, the scheme was to cost £166 million. A summer Supplementary in that year added a further £60 million. Not content with that, a Winter Supplementary was added of £89 million, making the first year's total £315 million. The Board of Trade for this year, 1968–69, upped the figure from £315 million to £380 million in its estimates and already this winter it has discovered that it is inadequate and it has come along for a further £45 million, making a total requirement of £425 million a year which is three times the

original estimate when this House was induced to vote for the scheme and to vote for the expenditure. We have really trebled annual expenditure on this item
This is one of the most rotten pieces of estimating and forecasting. Whatever the reasons, it is absolutely disgraceful that civil servants should have made mistakes of this order, and always on the wrong side. They never over-estimate and give us a credit. I think that the time has come to suggest that this expenditure is out of control, and the anomalies mentioned by my hon. Friend show that it is in a most unsatisfactory position.
We have to be steady and not emotional about it and to ask what value we are getting for the money. What is the result of this £425 million that is being invested this year and which is still growing? It is interesting that the manufacturing investment in this country has not risen. It is running at approximately the same annual level as in 1964 before the scheme was brought in. So, despite this enormous expenditure, we are not getting any increase in manufacturing investment, and presumably that is what it is designed to do. We are in the position of investing as a nation less than any of our competitors and at a time when the need to invest more has become absolutely crucial. In 1966 we invested 18·5 per cent. of our gross national product. I will not read out the figures for all the other countries which I have here, but it is interesting that Japan invested 35·2 per cent.—about twice as much as us. This extraordinarily low investment rate is one of the prime causes of our distress. Despite the expenditure of this large sum of money in grants we do not seem to be making any improvement in the level of industrial investment. It is to that problem that I turn my attention for a moment.
It seems ridiculous to tax all the industrial companies in this country in order to give them investment grants at a rate of 20 per cent. on this ever growing scale. The effect of investment grants is presumably to make investment more attractive. But this has an effect upon investment, which can be treated like a commodity. If we are to make it more attractive to spend capital, to invest by means of these grants, we have to deal with the other side of the equation which


is to make it more attractive to produce capital, that is, to save at the same time. The more we spend on subsidising investment the more we have to raise by penalising savings in taxation.
For example, if we subsidised the price of tomatoes, it would result in an increased demand for tomatoes because the public would be demanding more and more. But if we raised that subsidy by a tax on tomato growers there would be an ever dwindling amount of tomatoes grown and, therefore, an ever greater shortage. This is the position into which we have got ourselves. The more the Government go on subsidising tomato eaters the more they have to whack the producers of tomatoes with the result that the supply of capital for investment becomes smaller and smaller.
I believe that investments are made not because of the 20 per cent. grant, but because they are thought to be profitable, and the profitability has little to do with the rate of investment grant. To give an example, interest rates in the last four years have gone up from 5½ per cent. to approximately between 8 and 9 per cent. for new money in the market borrowed by first-class industrial companies. This represents a greater increase in industrial costs than is compensated for by the 20 per cent. grant which they receive in lieu. The 20 per cent. grant brings current interest rates down to 7 per cent. in equivalent terms, whereas in a development area it would only bring down the current rate of interest to around 5·3 per cent. The result is to put us back to where we were in 1964 in terms of interest rates in a development area and to keep us in the position of being at a 7 per cent. rate of interest in a non-development area. Therefore, we can see that this expenditure of a vast sum of money is unlikely to be very tempting to industrialists or to have much effect on stimulating investment, which depends much more on confidence, security, stability—

Mr. Deputy Speaker (Mr. Sydney Irving): Order. The hon. Member is getting into a wider debate than is admissible on Supplementary Estimates. He can argue against the Estimates, but he cannot go into this wider sphere.

Mr. Ridley: I accept that. I will quickly bring my remarks to a conclusion. These Supplementary Estimates

bring into doubt the whole value of this very large and expensive subsidy of £425 million a year which is rapidly being increased in every supplementary.
I have tried to show that there is no evidence that we are getting value for money and that the way to tackle the shortage of investment is much more at the supply end than at the spending end. I believe that the Government have a case to meet to justify coming to this House and asking for money. I believe that we should not grant it. I hope that their successors on the Treasury Bench, who will be of the same political colour as myself, will have the courage to come out and say that the investment grants system will be brought to an end. That seems to me to be the best way to deal with the problem.

5.38 p.m.

Mr. Kenneth Baker: Although it may have escaped the attention of hon. Members, we are discussing an increase of £45 million in investment grants. I am grateful that this subject is being discussed this afternoon. It is the largest part of the winter Supplementary Estimates, and we are fortunate that the subject came up in the ballot. If we approve this additional Estimate of £45 million, the total amount that will be spent in the current year upon investment grants is £425 million. We have to be satisfied that this extra amount of £45 million is money well spent. The first question that we ask the Minister is: what is the evidence that this is money well spent?
I understand that the object of spending this money is to stimulate investment, particularly in manufacturing industry. Has this been achieved? Has this substantial increase of £45 million already brought, or will it bring, substantial benefits?
Turning to the Board of Trade Journal of 24th January this year, we find a table of the actual level of investment this year compared with earlier years. The year 1968 shows a drop in manufacturing investment from £1,203 million to £1,190 million. So there was a drop of £13 million last year in investment by manufacturing industry. These figures are taken at 1958 prices.
It appears that we are being asked to approve additional expenditure of £45 million which has brought about a drop


in investment in manufacturing industry. It is interesting to note that during the same period last year—and again I get this information from the Board of Trade Journal—investment in distributive and service trades which, on the whole, do not qualify in all respects for investment grant, rose from £1,010 million to £1,030 million, while investment in that sector which the Government have selected to stimulate investment dropped. In these circumstances, can this money be well spent? I believe that the onus of proof rests with the Government to show that it can be. When the Minister replies perhaps he will tell us how many jobs were created by this sum of £45 million which we are being asked to approve. Perhaps he will tell us, too, how much extra production can be attributed to the expenditure of this sum, and also how much specific investment is directly attributable to it.
As was said earlier, some of the ground was worked over in the First Report of the Estimates Committee. On page 42 the hon. Member for Hampstead (Mr. Whitaker) asked:
Has there been any research done into the efficacy of the investment grant use as at present administered?
The official who replied said:
This is the subject of constant inquiry within the department, but I must say as yet we have no conclusive information.
We have been called here solemnly today to approve the expenditure of £45 million to stimulate investment which fell, and about which there is no conclusive evidence and information. It is therefore legitimate for us to ask the Government to produce the evidence that the investment grant system is beneficial to our economy.
I do not want to stray into the future, because I shall be out of order if I do so, but, if we are to stimulate the economy in 1969 and 1970, we must be sure that the money we spend on investment grants will produce an increase in investment. Businessmen do not believe that it will, and only yesterday the Financial Times carried the headline, "Industrial investment boom checked". The Board of Trade estimates that industrial investment this year will rise by 10 per cent. Last year it estimated that investment would rise by 5 per cent., but in fact the figure fell by £13 million.
This debate is timely, because I dare say the Government will be spending £400 million to £500 million on investment grants in 1969, and that sum might be even less productive than the money spent last year. There are various attitudes to investment grants. I do not want to broaden the debate too much. My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) is in favour of abolishing them. I believe that his argument is attractive because if, in 1968, this grant produced a fall in investment, it cannot be an effective way of stimulating the economy.
What has escaped the attention of the Minister and of the Government is that investment grants should be the means of stimulating marginal investment. Most investment consists of replacing plant and machinery, and old factories. This is done almost automatically. It is part of the business process. If there is to be encouragement to investment, whether by grants, which I believe is the worst method, or by initial allowances, the encouragement must be directed to increasing the marginal rate of investment, that is, to getting a little extra out of the investing public's pocket. That is what investment grants have been particularly unable to do.
The present system of investment grants is not only ineffective, but unfair, because it discriminates against the efficient firm in favour of the inefficient one. It discriminates against service industries, in favour of manufacturing industries. It discriminates against labour-intensive industries, in favour of capital-intensive industries, and it discriminates against non-development areas in favour of development areas.
How can the Minister justify a system which allows a company operating in, say, the Highlands of Scotland, to buy a computer for £1 million, a computer which might produce employment for six academics living with their families in crofters' cottages, and then gives that company £400,000? If, however, a company operating in the South of England in retailing, or warehousing, or wholesaling, spends £1 million on introducing an efficient retail network, or on a wholesale distribution network, or on introducing modern American methods of warehousing, how much will that company get


back from the Government? The answer is nothing. This is the sort of anomaly which is thrown up by the system of investment grants.

Mr. Dell: The hon. Gentleman might like to look at paragraph 89 of the orange book to which the hon. Member for Folkestone and Hythe (Mr. Costain) referred. If he does, he might find that his question is unnecessary.

Mr. Baker: I am familiar with that book, because part of my task outside the House is to interpret the tax angles in it. I assure the Minister that I shall be only too pleased to give him chapter and verse of the two companies to which I have referred.
Finally, I have tried to show that the investment grant system is ineffective because it has not produced an increase in manufacturing investment. This is one of the most disturbing features of our present economic situation. The system is unfair because it makes a whole set of arbitrary discriminatory rules against some parts of the country which are considered better than others, and some industries which are considered better than others.

Mr. David Steel: Mr. David Steel (Roxburgh, Selkirk and Peebles) rose—

Mr. Baker: Hon. Members should realise that when the hon. Member who has the Floor says "finally" it does not mean that he has come near to the end of his speech. I shall, none the less, take the hint and conclude my remarks.
If we want to stimulate industrial investment, which I believe is desperately required—and I am sure that there is nothing between the two sides of the House on this issue—and if we are to achieve an economic growth rate of 2, 2½, or 3 per cent., there must be a massive increase in investment. There must be, not a drop of £13 million, but an increase of £300 million in manufacturing industry alone. If we are to get that, we must give inducements to marginal investment, and not to normal investment which industry is doing all the time. The best way of doing that is by having an initial allowance of 50 per cent. and a write-off period of five years thereafter of the remaining 50 per cent.
Mr. Deputy Speaker, I see you sitting on the edge of your Chair. I do not intend to suggest something which requires new legislation, but I believe that what we have at the moment is the worst possible system of all. The system to which I have just referred would, I think, comply within the phrase used by General de Gaulle about gold. It would be "impartial" and "universal", alas not immutable, but this system of investment grants is mutable, and it will be possible to change it, because I am many of my colleagues believe that it is the worst system to adopt to stimulate industrial investment. It is the worst system which has ever been designed by a well-developed economy. It must be changed. It must be altered, and it must go, and in that respect it is like the Government.

5.50 p.m.

Mr. David Steel: I apologise to the hon. Member for Acton (Mr. Kenneth Baker) for being over-enthusiastic in rising to speak when he stopped for a moment to draw breath. The hon. Gentleman made an interesting speech. The fact that my name appears among others is purely fortuitous, and in a sense unfortunate, because I do not intend to follow the general trend of the argument which has been advanced so far. My experience as a Member representing a development area is the reverse of the general observations which have been made to date.
It must be borne in mind that one purpose of the investment grant system was to stimulate employment and capital investment in particular parts of the country, and in that respect I am not qualified to speak about the other matters raised by the hon. Gentleman. My experience, following the Industrial Development Act of 1966, is that conditions in both employment and investment are a good deal better than they were. Therefore, although I shall make a fairly critical speech, I shall do so on the basis of accepting that the investment grant system is basically good, and should be encouraged and promoted.

Mr. J. Bruce-Gardyne: Before the hon. Gentleman gets to his criticisms, will he deal with the point made by the Scottish Council of the C.B.I. that the improvement which has


been experienced in the development areas of Scotland is in no sense attributable to any of these things, including the investment grant system?

Mr. Steel: I do not intend to get into an argument about that. I intend to limit my speech to my experience in my constituency. It may be that the Scottish Council of the C.B.I. has views on how things have improved in Scotland as a whole. I shall not comment on that, just as I shall not comment on the case made by the hon. Member for Acton for tying the fall in manufacturing investment to the investment grant system. I do not think that the hon. Gentleman's case was complete, because he was confined by the narrowness of the debate. Other factors may be involved.
I want to come to the criticisms which I have to make of the method of administering this enormous sum of public money which has been put into investment grants. All the points which I shall make have been made in correspondence with different Ministers at the Board of Trade over the last two months. I represent a constituency which is hoping to attract new industry, generally of the smaller variety. It may be that as the development of the Border region progresses we shall want to attract to the area industries which employ between 200 and 2,000 people, but, generally, the new industries which come to my part of Scotland employ between 20 and 200 people. They are in the small bracket, and it is here that the system of investment grants as administered by the Board of Trade is defective.
The firm of Kenvale Textiles wanted to establish itself at the fairly remote village of Newcastleton in my constituency. The Government are pledged to a development scheme which retains the populations in rural communities. Here was an isolated village community of about 1,000 people. There was very little local industry, and even that amount has declined since the local railway line was closed.
In the middle of October, 1967, the gentleman who owned the firm wrote to me, and I put him in touch with the Scottish Country Industries Development Trust. It was not until 23rd April, 1968, about five months later, that the Board of Trade finally turned down his application

for various forms of financial assistance to get the business going. It seems to me that to take five months to go through the process of dealing with a single-man business, to investigate his accounts and the viability of the scheme, is to take far too long to deal with a relatively small amount of public money, and a relatively small industry.
In this instance I make no great complaint. I think that B.O.T.A.C. made the wrong decision. The firm went there despite the lack of assistance. It employs 20 people, and provides much-needed employment. In due course it will probably employ 60 people, but it is greatly handicapped by the shortage of working capital which is needed to assist an essential element in the economy of that small and remote community. This was my first experience of dealing with the Board of Trade.
Perhaps I might now give the House a current example of a larger firm, B. & T. (Essex) Limited, which is being ordered to a new industrial site in Hawick. The firm wishes to have its new factory ready by June to enable it to manufacture toys for the Christmas period. If the factory is not ready in June, the firm will have to put off the whole of its industrial cycle for a year, because everything is geared to the Christmas demand.
At the end of November last the firm applied for a building grant, and, I think for loan capital from the Board of Trade. In the correspondence which I have had with the Parliamentary Secretary, and which the Town Clerk of Hawick has had with the Department, it has become clear that no decision can be expected until the middle of March. Four months is a long time in which to investigate the finances of a fairly small company, and failure to make a decision is affecting the company's whole programme of development.
Only the other day I received a copy of a letter—I have not had the time to follow it up with the Board of Trade—which the Town Clerk of Hawick wrote to the Board of Trade. The letter is dated 29th January, and says that
one of the directors, who is handling the business side of operations, tells me that the Board of Trade accountants completed their inquiries about a fortnight ago and are in process of lodging their reports. The information I have received through Mr. Steel


to date indicates that it will be the second Wednesday in March before the application is placed before B.O.T.A.C. but I gather that meetings of this Committee are, in fact, held monthly so that there would be an earlier meeting on the second Wednesday in February.
I hope that it will be possible to advance the consideration of this application so that a decision can be made this month instead of next month.
Those examples clearly show that the Board of Trade's machinery is universal and omnibus for all forms of industry. If Fords of Dagenham were to go to the Cairngorms, the same machinery would be used by the Board of Trade as would be used for a small man who wanted to settle in a part of the development area of Scotland.
I shall not go into another example of which I think the Minister is aware, and which I have forwarded to the Parliamentary Commissioner, concerning the refusal of an investment grant to Mr. Dorward, but I propose to add to my examples the experience of a firm of photo-finishers in Peebles, a firm which takes trade from all over the country by means of mail orders. It is now building a factory on a new industrial site. It is the first new industrial development in the town, and is very much welcomed as being unconnected with the woollen trade.
At the end of July, just before the Summer Recess, in a Written Answer to the Parliamentary Private Secretary at the Board of Trade, the hon. Member for Aberdeen, South (Mr. Dewar), who is never slow to come to the rescue of the Government, the Government sneaked out the news that they were going to diminish, or to cease to grant, investment grants to service industries employing fewer than 50 people. That sort of announcement should not have been made in a Written Answer just before the House rose for the Summer Recess, because such news is of major importance to small towns in the development areas. It is of major importance to small towns in the development area. It is not perhaps significant in terms of the overall employment of the country, but it is important in terms of these small towns in my constituency, which are trying to attract new industry.
The decision to go ahead with the factory came just after the Board of Trade

announcement and I have had it confirmed by the Parliamentary Secretary that the firm will not be eligible, regrettably, for a building grant. It may be that the Board of Trade, faced with my criticisms, feels itself very much under pressure from the Estimates Committee and the Public Accounts Committee. It is true also that the Board of Trade has had some unfortunate experiences in Scotland. We all remember the Cadco affair at Glenrothes and there is some caution, therefore, in the granting of public money. This is right, but, somewhere in the Board of Trade, new machinery should be devised so that the same machinery used to spend £1 million on Cadco is not used when we are talking about a building grant of this figure, or for small allocations to small businesses. The Board of Trade uses a sledge hammer to crack a nut.
There are two ways of getting round this difficulty and I should be glad of the Minister's reaction to them. The first is that the Department should devolve the processing of these applications and have a sub-committee of B.O.T.A.C. or a similar organisation in Scotland to deal with applications of less than a certain value. I suspect that one reason for the complaints I have received is that just as the Estimates show that there has been an underestimate by the Board of Trade of the amounts involved in investment grants, so there has been an underestimate in the amount of work involved. I suspect, therefore, that the officials concerned are grossly overworked in dealing with these matters. If this is so, my suggestion is given added weight for the work on smaller applications to be devolved.
The second is that if it is not possible to do what I have suggested, then a special small unit should be set up by the Board of Trade to process small applications. This would avoid these matters having to be taken before monthly meetings of B.O.T.A.C. and there would be no need for lengthy investigations into relatively small applications.
The investment grant system has basically been good. However, it is too slow and it is critical in its slowness in dealing with the movement of complete small firms as opposed to the larger processes and decisions which must be made by large industries.
The Scottish Office is very much involved in the development area programme in my part of Scotland. I attended a meeting between the Minister of State and the local authorities, at which I made some of these observations. The Minister said that they came as news to him, and he was anxious that I should convey my criticisms to the Board of Trade. I have done so in correspondence.
It should be a matter of general concern that local authorities as well as firms coming into the area feel exasperated and frustrated in trying to carry out the Government's policy of moving firms into development areas, particularly when they find that the Board of Trade's machinery in this matter is cumbersome and unnecessarily slow.

6.3 p.m.

Sir Spencer Summers: Although we are primarily discussing investment grants, this is part of a debate based on the proposition that the Government be given authority for an additional £163 million; namely, the total winter Supplementary Estimates.
It is significant that the Labour Party, which is supposed to be the great reformer of the life of Parliament and is anxious to set up all sorts of committees to ensure that Government policies are given adequate scrutiny has at no time since the debate began contrived to provide more than five hon. Members on the benches opposite. For most of the time there have been only three hon. Gentlemen opposite in their place, and most of them have been Government spokesmen or Whips. Considering what hon. Gentlemen opposite say about their concern for public expenditure and, thus, taxation, the disparity of interest between the two sides in a subject like this is evident.
My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) has rendered great service in revealing the fantastic anomalies which inevitably arise in a system of this kind. He quoted many examples of the almost contradictory instructions which are given and explained how it would be almost impossible to deal even in a book with the potential anomalies that arise. The Estimates Committee is precluded from discussing policy. One is, therefore,

naturally glad when an investigation of this kind is brought to the Floor of the House because the inhibition in regard to policy matters which applies to the Committee which wrote the Report does not apply to us.
It is interesting to note that this system has its major impact on the cash flow of companies of all kinds. We were told that the import arrangements for the additional surcharge which were designed ostensibly to reduce imports, would not have much effect but would have a substantial effect of the amount of credit resources available and were worthy on that account. If cash resources are such an important part of the Government's weapons, it is strange that the Government should be using a weapon here which is contrary to the restrictions imposed on bank lending, for this is putting more cash from the Treasury at the disposal of companies to which, it is said, the banks should be chary of lending money.
In other words, this system is at variance with the advice tendered by the Chancellor of the Exchequer at the Guildhall recently and makes it still more difficult to understand how a system like this can be defended at a time when the very reverse of assistance in cash is the Government policy.
The Committee was somewhat inhibited in asking whether or not this was a good plan, since clearly the question impinged on policy. We asked, therefore, not for information on which we could judge whether it was a good plan—we should have been precluded from doing that—but what steps the Government had taken to find out whether, in practice, it was a good plan and was accomplishing the purposes for which it was designed. One bit of information we were given in response to questions of that kind appears in paragraph 27 of our Report:
A witness said that the Board knew that 'firms who are contemplating substantial investment have been very concerned to try and find out in advance what investment grant they would get, which suggests that this has been a considerable factor in their calculations'.
I take it from the context that the inference drawn by the witness about calculations and about whether or not firms should go ahead with certain propositions is an entirely false interpretation of the situation. The calculations to


which he should have referred are the amounts of cash that would be needed by companies to finance the projects in question. It is, therefore, false to assume that just because companies ask, "Are we to get a grant?" they are interested to the extent of saying, "We shall or shall not go ahead with the project". They are simply interested to know what effect the project, with or without grant, would have on the cash resources available to them.
We asked what steps had been taken to find out whether the scheme was good. We were told that nothing in the way of comprehensive research had been carried out. It is strange that we should have a system involving the expenditure of £425 million with no steps as yet having been taken to find out whether it is achieving its object.
I freely admit that it is virtually impossible to find out by any scientific means whether that object is being achieved by this method. To give an analogy in another context, I was once asked for my views on whether the Peace Corps field training experience was of value to those concerned. A year after the training experience those who had taken it were asked what effect it had had on their efficacy in the field, and I was asked for my views. I replied that it was impossible for anyone to fill in the questionnaire honestly because it could not be said with accuracy whether the experience, lasting a few weeks a year earlier, had resulted from one of many experiences, such as an event in one's life, coming into contact with a pretty girl or fifty-five or more other factors. Many things enter into the matter when deciding what influences decisions of that sort.
The same applies here. The state of the market, the likelihood of competition, the extent of the profits which will accrue to the company to invest—all these things are vital in deciding whether a project should go ahead or not. It is virtually impossible to find which of these many factors, the addition to the cash flow to the business and so forth, are influencing firms to behave in a particular way. We have had examples to show that in those fields where it was hoped that investment would follow, investment has fallen and where it was hoped that it would fall it has increased.
Whether it be this scheme or all the other influences to which a board of directors is subject it is clear that this is not the paramount one. All this adds up to the proposition that if we cannot scientifically discover with any greater certainty than is apparent at present that over £400 million of public money is achieving the object claimed, it is high time that we stopped spending money in that way.
I am glad that the time and effort of the Estimates Committee has led to discussion on the Floor of the House of the merits of the scheme, which I believe will in the course of time be proved to have outlived its usefulness.

6.12 p.m.

Mr. Cyril Bence: I was encouraged to make a contribution to this discussion by the remarks of the hon. Member for Salisbury (Sir S. Summers). We have passed through a long period when it has been a useful economic exercise for the Slate to collect funds in the form of taxes in order that those funds should be channelled into industrial processes in the regions through industrial institutions and also to individuals. This has been a useful process over the last 40 years.
But when a State is developing technologically and scientifically and the situation of the individual in society and industry becomes more secure, when the techniques of managing the market and finding the product for the market are easier than they were 40 or 50 years ago, I wonder whether the State and society may be approaching a situation in which we are creating a huge complex of feed-pipes to pour out money, having collected it from society, and then starting the process over the next few months of going to the outlets of those pipes to collect our share. As we create greater prosperity for the individual—

Mr. Deputy Speaker: Order. I have difficulty in relating the hon. Member's remarks to the Supplementary Estimate. Perhaps he will help me.

Mr. Bence: Yes, Mr. Deputy Speaker. I am thinking of investment grants. I think there is a process in this method—collecting vast sums of money by taxation from the community as a whole, taking it from our pockets in taxes after we are paid on a Friday, centralising it


and putting it back by investment grants into institutions in which we have our interest—which is like emptying some bottles so as to fill another bottle. I hope that I am in order in trying to make the point which I should like to have examined by economists, who often have not been right.
I wonder whether it would be worth examining whether it is right to have hundreds of millions collected in taxation and given back in investment grants, or whether it would be better to leave the hundreds of millions in the hands of businessmen and industrialists to make their judgments on investment rather than pumping the money through the State in ever-increasing quantities. This would be one way of cutting Government expenditure and impelling industrialists—

Mr. Deputy Speaker: Order. This is a proposition which the hon. Member cannot discuss in detail tonight. He must come to the Supplementary Estimate of £45 million.

Sir S. Summers: Does not the hon. Member think it would be a good start in the process, to which he may be coming, to join those who object to spending £45 million in this way?

Mr. Bence: I agree that this £45 million has to be collected. I suppose I have made some contribution towards it. The industry in which I was interested and employed paid something towards it on a Friday and then collected some of it back on the following Friday. We could short-circuit this process which increases bureaucracy by collecting from taxpayers and getting money circulating by what seems an unnecessary process. It would be a good thing to have an inquiry into the whole domestic monetary machine.

Mr. Deputy Speaker: Order. This is very interesting, but I am afraid not on this occasion. We cannot discuss taxation but only the question of the £45 million Supplementary Estimate concerned with investment grants.

Mr. Bence: I do not know from where the £45 million comes, but I presume it is from taxation.

Mr. Deputy Speaker: Order. The hon. Member is perfectly correct, but he cannot discuss where it comes from tonight.

Mr. Bence: Naturally, I accept your Ruling, Mr. Deputy Speaker. I am trying to suggest that we could cut out all the unnecessary complex machinery involved in collecting this £45 million from the people and then giving it back at some other point. I am sorry if I am on the wrong theme, but I am deeply concerned. I think we should consider whether we are channelling too much money through the central State machine and not leaving sufficient in the hands of people to do more for themselves.

6.18 p.m.

Mr. David Waddington: The hon. Member for Dunbartonshire, East (Mr. Bence) will forgive me if I do not follow him because I fear that if I did I should speedily be ruled out of order. I think there is a great deal in what he said. For a long time I have been worried by the fact that we have moved into a situation in which everyone seems to have a hand in everyone else's pocket. That does not seem to be a satisfactory state of affairs.
In accordance with the practice of the House, I must declare my interest. I am a director of two small cotton manufacturing concerns. What I have to say is not coloured by my interest, which is strictly limited, and I am not often able to devote my time to my interest in that direction. It strikes me as peculiar that this Government of planners who habitually claim to know better than private industry what is good for the country and what level of capacity is required almost always manage to get their sums wrong. It has emerged clearly from this debate so far that this time they have got their sums wrong to the tune of £45 million. That is not "peanuts" when we think of all the trouble there was over school meals a few months ago, and it is not a fluke. The Winter Supplementary Estimates for last year show that at that time they got the sums wrong to the tune of £60 million.
Many of us have the gravest doubts whether investment grants are a good idea. I appreciate that I cannot ask for legislation to scrap them. What I can


perhaps do within the rules of order is say that there is a body of evidence to the effect that investment grants are wasteful. All hon. Members on this side will expect the Minister, in the face of that evidence, and at the conclusion of this debate, to try to prove their usefulness, because, as far as I can see, no evidence thus far has been produced by this Administration to prove their usefulness. We are entitled to seek some powerful evidence of their usefulness when common sense tells us that it is not, on the face of it, very sensible to give money to a company whether it is capable of making a profit out of it or not.
It has been pointed out that in large parts of the country—I refer now to the development areas—firms are receiving these grants at double the normal rates. Again, there is powerful evidence that we are not getting value for money. I for my part expect and hope that the Minister will try to prove that part of this £45 million which is referable to the 40 per cent. investment grants in development areas is good value for money for the taxpayer.
My mind immediately goes to the case of the Ford Motor Company, which has a fairly new plant at Halewood on Merseyside. Ford at Halewood now gets a 40 per cent. grant in respect of any new machinery it installs, in addition to the 37s. 6d. a week a worker it receives by way of regional employment premium. I am not anti-American and I have no objection to American investment in Britain, but I am surely entitled to ask whether it is not crazy that, while we are forbidden to make profitable investments abroad, we as taxpayers, and with no financial interest in Ford, are compelled to give the Ford Motor Company a present of £40 for every £100 worth of machinery it buys. To put it another way, how can it be right and in the taxpayers' interest that a company which is 100 per cent. American-controlled should be able to expand on only 60 per cent. American capital? I should like some convincing from the Minister that that part of this extra £45 million which is going into the development areas, and in particular into that development area which is not far from my constituency, is money well spent.
When this scheme was introduced we were told time and time again that it would be very discriminating and flexible, that it was a worth-while reform because only in this way would the taxpayer get full value for money, only in this way would his money be used in such a way that he got a real response by way of industrial investment.
The scheme has proved completely inflexible and quite unable to cope with some of the major problems of today. One example is that of the grey areas. Although for a long time places like Nelson and Colne—my constituency—have been suffering and people have been leaving such areas to go to development areas simply because of the regional employment premium and double investment grants, the Government have merely sat on their backsides, wrung their hands and enjoined us to wait until the Hunt Committee reports. Incidentally, that Report is an unconscionable time acoming. So much for this dynamic, purposive Government. I hope that at the conclusion of the debate the Minister will try—he will have a very difficult task—to prove to me and to others on this side that any of this £45 million is money well spent.

6.25 p.m.

Mr. Michael Shaw: We should all be grateful to my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) for initiating this debate. It is inevitable that certain aspects of investment grants are referred to time and again, not only in the speeches which have been made today, but in those which have been made previously. I well remember the broad and deep division of opinion between the two sides of the House as to the collective merits of the two types of assistance—investment allowances and investment grants—when the Industrial Development Bill went through the House in 1966.
This afternoon I shall deal only with investment grants. The disadvantages which flow from this system as distinct from any other system have been highlighted again today. I have some practical experience of the working of investment grants. I am convinced that this is not the better system. The great weaknesses are just those which were foreseen at the inauguration of the


system. There is, first, the discrimination in favour of manufacturing industries as against other industries. The system hits hard at service industries, particularly tourism. This was and is still deeply resented by the tourist industry. Even more fundamental is the objection that this system does not impose any discipline on the industry receiving the benefit to encourage it to make a profit and to earn this reward only after making a profit.
I want to refer to the Report of Sub-Committee D of the Estimates Committee, which examined the Supplementary Estimates. My first point relates to what was called by the Sub-Committee the possibility of a cut-off date for making applications. At present there is no cutoff date. The question was raised by the Committee whether it would be advisable to introduce such a cut-off date so that the Ministry could finalise claims for expenditure made in a particular year. I was glad to note that in its answers the Ministry indicated that it saw no need as yet for a cut-off date.
On the evidence so far, certainly as it appeared before the Sub-Committee, I hold the view strongly that there is no need for a cut-off date. One of the responders to the question was good enough to submit a short memorandum as to the incidence of applications during the six quarters ending the third quarter of 1968. It is clear from that evidence that there is a rapid tail-off in the applications being made in respect of the old expenditure. It seems that old applications will quickly be mopped up in two or three years. Applications for allowance for Income Tax purposes can be made as far back as six years in normal circumstances, and it would appear that claims for investment grants will be made well within that period. On that evidence I believe that the Ministry is right not to seek powers to establish a cut-off date by which applications for the grant must be made.
The next point I had in mind has already been made, but I do not apologise for returning to it. It emerges from Question No. 290, put by the hon. Member for Hampstead (Mr. Whitaker), the most important question put throughout all those proceedings of the Committee:

Has there been any research done into the efficacy of the investment grant as at present administered?
As my hon. Friend the Member for Aylesbury (Sir S. Summers) said, the answer came in two parts. The first part was to this effect:
We do know that many firms, particularly the larger firms, who are contemplating substantial investment have been very concerned to try and find out in advance what investment grant they would get.
The point of that inquiry is plain. It is made not to decide whether to make an investment but in order to work out future capital requirements. Unlike Government Departments, an industrialist has to get it right, because if he gets it wrong the banks, at least nowadays, cannot come in to bail him out for the extra. Obviously, therefore, for any major expenditure there must be an inquiry of that kind before it is undertaken.
I add in parenthesis that under the present Government in many more cases than would be normal the question whether the 40 per cent. grant, as it is in the development districts, is given can be critical for the venture, since industrialists know that they are very tightly controlled by the banks nowadays. I regard that as an artificial state of affairs—or it should be. It is rapidly developing into a permanent state of affairs under this Government.
The crux of the matter is that 95 per cent. of investments made in this country—this certainly applies to most of those which I see—are made not on the criterion of whether the industrialist will have some sort of grant but on the judgment of confidence as to the buoyancy and expansion of the economy in the future. If businessmen have confidence, they will not need the investment grant. If they do not need it, it is money which the Government could save by not spending it.
The second interest of industrialists is to see whether, having invested the money they will secure an adequate return as a result. If they see that they will have an adequate return, they will invest. Again, if they have invested on that basis, the Government waste public money by giving them a grant in addition.
The third important factor taken into account by industrialists when investing is the nature and extent of competition


facing them or likely to face them. Can they afford not to invest if they are to stay in business? If the answer is that they cannot afford to do without the investment, they will invest. As I say, spurred on by the picture presented by those three factors, and not by whether they will have the grant, businessmen make 95 per cent. of their investments.
It is vital, therefore, if we are to continue this system, that we have far greater knowledge of the effectiveness of investment grants. Here I draw attention to the last part of the answer given by the official to Question No. 290:
But there has as yet been nothing in the way of comprehensive research into this matter.
That situation must be rectified as soon as possible.
I hope that the Minister will tell us that research is being undertaken as a matter of urgency to find out how effective the investment grant system is in initiating additional capital expenditure. I beg the hon. Gentleman to put into that inquiry the further query which I have already posed: On the assumption that the credit squeeze is no longer with us, is the investment grant such an important element in the decision whether to invest?
In my view, the investment grant system needs to be carefully studied if it is to be continued. I agree with the hon. Member for Dunbartonshire, East (Mr. Bence) when he says that today far too much money is going out of the industrialist's pocket into the Treasury and then back again into his other pocket. Where it is proved not to be necessary, it is time that that came to an end.

6.36 p.m.

Earl of Dalkeith: We are all grateful to my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) for having initiated this debate and given us an opportunity to discuss important aspects of the investment grant system.
At the outset, I dissociate myself from some of the remarks made by my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) when he endeavoured, I thought, rather too strongly to depreciate the aims and achievements of investment grants in

relation to development districts. However, I should prefer to debate that with him outside rather than here now. I have only one comment to make in passing in that context. The greatest extravagance in which any nation can indulge is to pay large numbers of men large sums of money for doing nothing. Obviously, and rightly so, a great deal of emphasis during the debate has been put on the need to secure value for the money which is handed out by the Government in investment grants. These are large sums, and it is right that we should see that the money is well spent and that we do have good value for it. That requirement must always be kept in mind.
I strongly support my Member of Parliament, the hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel), when he asks for a speeding up of the procedures in investigating applications, particularly those coming from small companies which can make such a big difference to small isolated communities such as the one to which he referred, Newcastleton. If the Board of Trade can devise a new method to speed things up, it will be greatly welcomed by many people in many parts of Scotland.

Mr. Dell: The noble Lord will realise that investment grants are now paid six months more speedily than investment allowances. I understood the hon. Member for Roxburgh, Selkirk and Peebles to be talking about grants under the Local Employment Act.

Earl of Dalkeith: Yes, but we must, if we can, cut down any waste of time. The hon. Gentleman gave the example of a toy factory for which it was crucial that the answer should be given fairly early on. Is it possible for the Board of Trade to have a separate Scottish establishment, perhaps responsible to the Secretary of State for Scotland, which could deal with some of the smaller applications?
The only other local point I make relates to Edinburgh, and I shall pass over it quickly for fear of straying out of order. I draw the Minister's attention to the great difficulties created by the geographical boundaries selected for those areas which qualify for development grants because they are development districts and for those which are excluded. There is now the most extraordinary situation whereby Edinburgh, which is the one and


only small area excluded from development district status within an enormous area, is undergoing the most awful convulsions—I can only call it that—whereby industries are picking themselves up and moving outside the City boundaries in order to qualify for grant. This is absurd, because it is merely transferring unemployment from one locality to another. It is not adding in any measure to the general increase of the prosperity of Scotland. I hope that the Minister of State will look at this matter.
My main objective is to draw attention to another industry, and to ask the Minister how he decides which industries should qualify for grant and which should be left out. The industry to which I refer in particular is forestry, in which I declare an interest as I am involved to a considerable extent. What criterion does the Board of Trade adopt in allowing the extractive industries, for example, to have grant but not forestry, which performs much the same sort of occupation?
There are four compelling reasons why the Government should consider giving an investment grant for harvesting equipment in forestry. First, it is logical that forestry should be put alongside the extractive industries. Secondly, forestry has an enormous import-saving potential. Timber imports in every form cost the country about £640 million a year. As a result of giving investment grant to forestry, we should get quicker development of machinery and harvesting equipment, greater efficiency and lower costs. There would be quick results.
Thirdly, we should also be encouraging the development of industry in the far away parts of the country—the Highlands and some of the far outlying areas which are suffering depopulation. Fourthly, Scotland is struggling to recover from the terrible hurricane damage of a year ago, and if a grant could be applied to harvesting machinery for forestry, Scotland would be able to overcome its great problems much to the advantage of the nation in that the timber which is now lying all over Scotland could immediately be put to good use throughout the British Isles and could at once save money spent on imports.
I am reluctant to ask the Government at this time for any form of increased

spending but there are occasional exceptions to the rule, particularly when it can be shown that the nation will be making a worth-while investment.

Mr. Speaker: Order. The hon. Gentle man cannot ask for increased expenditure in this debate. He can, however, talk about switching some of the £45 million if he wishes to.

Earl of Dalkeith: I was just about coming to my last sentence, my great peroration, Mr. Speaker. I ask the Minister of State to consider this suggestion seriously, since I believe that it would be much to the advantage of the nation as a whole.

6.45 p.m.

Mr. Tom Boardman (Leicester, South-West): I shall not follow my noble Friend the Member for Edinburgh, North (Earl of Dalkeith) into a discussion of Scotland or forestry, which are far from my constituency, although they are close to my heart. I endorse what has been said by my hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) but at the same time make one exception to his speech. He referred to investment being made on confidence and buoyancy. That is how it should be, but it is not always so. I believe that the grant has distorted investment judgment. I believe that firms tend to invest where they will get a grant, whereas economic sense would not always justify the investment. If the investment grant does anything, it tends to distort the proper business decisions on which investment should be made. My hon. Friend may be right in saying that the grant does nothing. If that is so, it should not be paid, and that may well be the right answer.
My hon. Friend the Member for Folkestone and Hythe (Mr. Costain) did a great service in exposing the administrative nonsense in the system. He revealed its ugliness and, as one might call it, its indecent exposure in that he stripped it and showed us its raw spots. I will add four illustrations, which I believe have deep economic significance to industries with which I am personally concerned or with which my constituency is concerned, of the way the grant is operating harshly or unfairly and makes nonsense.
The first is the footwear trade, which the Minister of State knows well. One


of the vital pieces of plant in the industry-is the sets of lasts. On these lasts, the building of the shoe or boot depends. Lasts are supplied in sets of various pairs, shapes, sizes and fittings. But because each last costs less than £50 no investment grant can be paid upon them, although a set of lasts, which is the complete tool, costs considerably more than £50. The industry, which is one of our growing export industries and has a vital rôle to play at home as well, is placed under this penalty and deprived of a grant which I believe it should get. I ask the hon. Gentleman whether he has given further reflection to his legal powers in refusing the grant in view of the British Oxygen case.
The second illustration is the scrap metal industry. It is well known that an enormous amount of saving of imports is achieved by reclamation of ferrous and non-ferrous metals. A letter circulated by the British Secondary Metals Association some time ago gave figures which have not been challenged. These show that the reclamation industry as a whole saves more than £1,000 million annually in foreign exchange, of which more than one-third is attributable to non-ferrous metals. This reclamation is achieved by the use of plant and machinery, and yet modern plant and machinery used in that vital import-saving industry is deprived of investment grant. Can that be right?
Thirdly, there is the illustration of the disposal of trade effluent—I can hardly call it an industry. Investment grant in this case is paid to manufacturers who, in connection with such disposals, put down their own sewage disposal plants or add or adapt their disposal systems in bringing their effluent up to requirements. An industry particularly affected here is the leather industry. The Minister will be aware of the representations made by the British Leather Federation. I should declare an interest, as I am a director of a tannery.
In most cases the treatment of the effluent can best be done at the local authority sewage works. Instead of each manufacturer putting down his own little plant, the large plant of the local authority can be extended or altered to deal with the combined effluent. But in that case the local authority cannot get an investment grant. It can charge back to

the manufacturer an annual sum representing the capital cost of the central works, but as no investment grant is paid it often comes to substantially more than the manufacturer's own plant would after he has got the grant. This is an absurd waste of money, and should be looked at again.
My fourth point concerns the administration of the scheme as it applies to plant bought on hire-purchase terms. Plant is often bought by people who have set up in partnership to start a small business. When the business prospers and expands, as most businesses set up by young men of enterprise will, the owners are advised to convert it—I use the term loosely—into a private company, and the plant is notionally transferred to a private company. I say "notionally" because it is the same factory, the same men and the same everything, but the business is an incorporated company instead of a partnership. Yet investment grants that would have been allowed on the future hire-purchase instalments had the business continued as a partnership are not payable to the company, which therefore suffers a loss. This is a deterrent to people forming themselves into a corporate organisation which can expand, and I ask the Minister to look again at it.
If the grants have any economic purpose—and as we are discussing an extra £45 million, the Government presumably think that they must have some—instances such as the four I have quoted, plus the many more ably quoted by my hon. Friend the Member for Folkestone and Hythe should be remedied. The attitude that has appeared when such points have been raised in correspondence and at Question Time shows a complacency which I have heard defined as "compound ignorance". I am told that ignorance is when people do not know, and that compound ignorance is when they do not know that they do not know. I should hate to accuse the Minister of ignorance or compound ignorance, and I hope that his answer will satisfy us that he is guilty of neither.

6.53 p.m.

Sir Keith Joseph: The Minister of State has nobly, and virtually on his own, sat out this debate. He has a large number of questions to


answer, and I shall try to put to him what I think to be the four main ones to emerge from the speeches. There will also be a number of detailed points that he will have picked up, and which we hope he will answer.
We owe thanks to my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) for opening the debate in the way that he did. He gave the House a catalogue of some of the conundrums that result from the arbitrary distinctions inherent in the investment grant system. We look forward to the Minister's comments on what he said.
We also owe a great deal to the Estimates Committee, which put some of the key questions that have recurred time and time again in the speeches today. The disadvantage of the sort of expenditure we are considering is that it is inherently very difficult to predict. We must accept that, but some of us are left with a feeling of amazement at how any Chancellor of the Exchequer can live with runaway expenditure such as investment grants involved last year and again this year. They are costing the taxpayer £425 million this year. Last year there were two extra demands on the taxpayer of £60 million and £89 million, and this year there has been an extra demand, unpredicted when the Chancellor introduced his Budget, of £45 million. The grant system is almost turning into a blank cheque.
Yet the immense sums with which we are dealing may not be the end of the story. There were news items after the Prime Minister's conference at Chequers that all concerned were going away to discover how they could spend more money to encourage investment, and we have the C.B.I. asking that the 1968 investment bonus should be continued during the current year. Therefore, large though the sums are, the demand to increase them may remain to embarrass the Government.
It is true that investment grants are not quite as costly to the taxpayer as the figures might suggest. I understand that to the extent that the grant replaces a company's expenditure its claim to set depreciation against tax is reduced, and this is some offset for the taxpayer.
The purpose behind investment grants, and behind the distinction between the level of grant outside and inside the development areas is at least common to both sides of the House. We all want more, better used investment, and we all want prosperity in all parts of the country. The question raised by the Estimates Committee's Report is whether the present system serves those purposes best. My hon. Friends the Members for Cirencester and Tewkesbury (Mr. Ridley) and Acton (Mr. Kenneth Baker) suggested radical changes which were vigorously opposed by my noble Friend the Member for Edinburgh, North (Lord Dalkeith). Without entering into the argument on this occasion, I would say only that it would be perfectly possible to reconsider investment incentives in general while still giving special investment advantages to the development areas and to any individual industry which made out a good case for special treatment.
We can all agree that investment is vitally important, but most of us on this side of the House would add that it is by no means in itself a panacea for this country's needs. It is first the quality, quite as much as the quantity, of investment that matters. The marketing, design and production cost of our goods matter equally.
Nevertheless, we start in agreement that investment is vital. But it was my hon. Friend the Member for Aylesbury (Sir S. Summers) who was the first in today's debate to put his finger on the key issue. My hon. Friend, who was on the Committee, quoted from paragraph 27 of its Report to ask the crucial question, "How effective is the investment grant system in increasing investment?"
I should like to put four questions to the Minister. The first is that put by my hon. Friend the Member for Aylesbury: what is the link between investment grants and investment? The question was also put vigorously and effectively by my hon. Friends the Members for Cirencester and Tewkesbury, Acton and Nelson and Colne (Mr. Waddington). My hon. Friend the Member for Scarborough and Whitby (Mr. Michael Shaw) correctly emphasised that investment decisions are made far more on the grounds of confidence, hope of profit and a buoyant market than they are because of the amount of availability of investment incentives.
As many of my hon. Friends have pointed out, throughout the application of these investment grants, manufacturing investment has been stagnant. Meanwhile, paradoxically, commerce and distributive industry investment, which gets no grants has increased. The Government have to explain now, in these circumstances, the expenditure of the taxpayers' money can be justified. We know that the President of the Board of Trade has said that he accepts this paradox, but that he believes that investment grants have prevented manufacturing investment slipping as much as it would have slipped. This may or may not be a good argument, but we cannot accept it on the say so of the President of the Board of Trade.
We hope that the Minister of State will address himself to the link, to the paradox that commercial investment, without investment grants, has increased, while manufacturing investment with grants has decreased. Will he explain what justification, if any, there is for believing that manufacturing investment would have decreased even more but for the grants? The first question to the Minister of State is: what is the link between investment grants and manufacturing investment?
I leave aside the very valid point made by my hon. Friend the Member for Leicester, South-West (Mr. Tom Board-man) that investment grants may have a distorting influence on investment decisions that are made. The second question to the Minister of State is: what is the link between investment grants and jobs in the development areas? We note that the main reason for the under-estimation by the Government of the cost of investment grants was that they assumed that the development area component would be 20 per cent., when it has turned out to be nearer 33 per cent. What is the measure of the benefit to the development areas compared with the extra cost to the taxpayer? Does he accept that there are investments, sometimes quite large ones in the development areas, which receive large investment grants but which would have gone to those development areas anyway, for good commercial reasons?

Mr. Dan Jones: How can we say that?

Sir K. Joseph: It would be easy if one wished to check, by talking to the individual

firms. It is my belief, without quoting cases, although I would be prepared to do so in private, that many firms would admit that the investment grant was no more than a bonus, received as the result of a decision that would have been made anyway. Secondly, we ask the Minister of State to tell us how many jobs have been created in the development areas by the investment grant system, and by the extra investment grants given in the development areas.
We note the comments of the economic Review of the National Institute of Economic and Social Research that:
The most obvious interpretation is that this incentive …
has the effect of systematically segregating the most capital intensive industries in the assisted areas and the labour intensive industries outside them. This is the very opposite of the objectives of the Government and the Opposition. We know from the Board of Trade's publication that the largest slice of this huge investment grant sum coming from the taxpayers' pockets, has gone to the chemical industry, the most capital intensive of all industries, the one least likely to bring large numbers of jobs with it. We are left with the thought that perhaps an alternative use of part of the money spent outside development areas would produce more jobs inside them, perhaps by better roads, more help to industry for retraining and lower taxes.
The third question is what are the Government's views of the prospects? Quarter after quarter the Government have predicted increased manufacturing prospects. Quarter after quarter their prediction has had to be cut down. We have from the Government a sort of manufacturing investment mirage. It all looks handsome in the distance, but as the time approaches it fades away. Only last month we had cheerful forecasts for an increase in manufacturing investment during 1969. But the opinions on which that forecast was based were given before the Chancellor's November package. We gather from the Financial Times this Monday that business is less confident, or rather a smaller proportion of business is confident now than it was four months ago, that it will be increasing its manufacturing investment during


1969. Will the Minister of State give us the latest Government opinion on this?
I resist the temptation, because we so want to hear the Minister of State, to go into the burdens of the overheads on industry which this whole grants system involves. My last question, to which we want a categoric answer is: will the Minister say whether or not the research requested by the Estimates Committee into the effectiveness of expenditure on investment grants is being commissioned by the Government? The four points I have put from this Box are: what is the link between investment grants and manufacturing investment; what is the link between investment grants and the number of jobs created in development areas; what are the prospects for manufacturing investment in 1969; and is the research requested by the Estimates Committee being put in hand?

7.7 p.m.

The Minister of State, Board of Trade (Mr. Edmund Dell): I will certainly try to deal with the very large number of questions raised during this interesting debate. It is a good thing that we have had the opportunity to discuss investment grants, and although it has been a critical debate, it has been useful. Let me first state certain points of agreement with what the right hon. Member for Leeds, North-East (Sir K. Joseph) said. Investment is vital, it is not a panacea, and it is as important, if not more important, to secure the right quality rather than the right quantity of investment.

One question which has been put during the debate is whether investment incentives assist one to achieve this necessary level of investment. There have been some hon. Members such as the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), with the unexpected assistance of my hon. Friend the Member for Dunbartonshire, East (Mr. Bence), who thought that any system of investment incentives was undesirable. I do not propose to argue with that very much. The experience of both parties in Government has shown that they are wrong. The Industrial Policy Group, although not in favour of our present system of investment incentives, is in favour of a system.

The hon. Member for Leicester, South-West (Mr. Tom Boardman) thought that

the investment grant system distorted the pattern of investment, if it did anything. Any system of investment incentives distorts the pattern of investment. The investment allowance system with its discrimination in favour of development areas, which the previous Government adopted, distorted the pattern of investment, and deliberately so. Either this is a criticism of the whole system or a point which we can note in passing and get on to the main matters raised.

Mr. Tom Boardman: My criticism was that it distorted the proper economic argument, not the pattern of investment

Mr. Dell: I note the hon. Gentleman's point. I think that I have already replied to it.
If we want a system of investment incentive—and it is on that proposition that the rest of my remarks will be based—it seems to me that the investment grants system has substantial advantages. The fact that it is a cash grant is of psychological importance, because it is more clearly understood by industry. It is also more clearly understood by industry in that there is a greater degree of stability in the level of investment grants. The investment allowance system was changed again and again. The hon. Member for Folkestone and Hythe (Mr. Costain) reproached us about the uncertainty of the investment grants system. I think that the uncertainty in the investment allowance system greatly exceeded it. However, uncertainty on all the points which the hon. Gentleman raised in criticism of the investment grants system can be substantially removed in almost every case by consulting the local investment grant office.
I grant the hon. Member for Folkestone and Hythe and other hon. Members who made this point that there were cases in the early history of the investment grant system, when we were gaining experience of its administration, of the policy being changed. But that period is, I hope, substantially over. The right way to discover whether one is likely to be entitled to an investment grant is to go to the investment grant office. A substantial advantage of the investment grants system is that it has had this greater stability. When we changed the rate, it was upwards, and we gave two years' notice of the fact that after the


end of 1968 it would revert to the original levels.
The regional incentive is a most important aspect of the investment grants system. I note that many hon. Members opposite do not believe in discrimination in favour of the development areas. The problems which the hon. Member for Folkestone and Hythe and other hon. Members raised are, unfortunately, inherent in discriminating in favour of the development areas. Certain difficulties are created when machinery crosses borders, but I do not see how we get over them if we discriminate in favour of development areas. That is the basic element in the policy.
Criticism has been directed against the way in which the investment grants system selects manufacturing industry for assistance. This is a reasonable discrimination. After all, manufacturing industry is responsible for 80 per cent. of our visible exports. It so happens that it is in manufacturing industry that the level of investment in this country has mainly lagged compared with countries like Germany.
The right hon. Member for Leeds, North-East said that there was this paradox: investment in distribution and services has risen, investment in manufacturing industry has not risen. I should have thought that this was support for the proposition that it is on manufacturing investment that we need to concentrate our investment incentives.

Mr. Ridley: The hon. Gentleman must address himself to the point that this treatment does not seem to have worked and that the level of investment in manufacturing industry has not risen. Why does he think that it has not, and what is he prepared to do about the matter?

Mr. Dell: I agree that I must address myself to that problem, and I promise the hon. Gentleman that I shall do so.
The investment grants system is discretionary; the Board of Trade has a discretion in its administration. The reasons for this discretion are very powerful. By this discretion, we can avoid the extension of the area of benefit in the way done under the investment allowance system, which was extended by a succession of court cases, which increased its uncertainty, into most peculiar areas. This discretion, which has been criticised,

is a valuable and essential part of the system. But it is not administered in a haphazard way. It is not administered in response to Treasury pressure to discriminate against particular people in order to save money. Discretion is operated in order to maintain consistency in the operation of the investment grants system.

Sir K. Joseph: If investment is made in a development area which would have been made there anyway and which will bring very few new jobs, would the Board of Trade use its discretion not to give it an investment grant?

Mr. Dell: Certainly not, because to do so would be inconsistent with the policy of the Act and with the maintenance of consistency in the administration of the investment grants system.
There is a point about the investment grant system which hon. Members opposite have tried to get away from whenever they have spoken about speed. The investment grant system has within it the potentiality of reducing the period of payment even further. Already it is 12 months compared with 18 months under the investment allowances system. That, taking into account discounted cash flow calculation, increases the value of the grant even further.
There is the criticism that the system is not profit-oriented. The hon. Member for Scarborough and Whitby (Mr. Michael Shaw) made that point. It is also made in the somewhat academic review of the investment grants system published by the Industrial Policy Group. This is not a substantial criticism of the system. Even if one gets a 20 per cent. grant or a 40 per cent. grant, one has still to put up 80 or 60 per cent. of the money. People will not do that unless there is the prospect of profit.
The hon. Member for Roxburgh, Selkirk and Peebles (Mr. David Steel) was concerned with the interest of small firms. New small firms are often of great potential value to the economy. But a new small firm does not yet have a profit record. Either it has not a profit record or it has not a profit record sufficient to get the full benefit of the investment allowance. Therefore, the investment grants system is of substantial benefit compared with the investment allowance system.
Criticism has been made of the fact that the Board of Trade has not yet made any attempt to assess the effectiveness of the investment grants system in promoting investment. This criticism is a little odd because during all the years of the investment allowances system no attempt was made, as far as I know, to assess its effectiveness. It would have been very difficult to make such an assessment because of the continual changes and uncertainty connected with it.
The hon. Member for Aylesbury (Sir S. Summers) put forward a most extraordinary proposition. He said that if we cannot scientifically establish the benefits of a system we should not adopt it. If that principle were followed in life, in government, or in the conduct of industry we should never take a decision. We cannot scientifically establish the benefits of the investment grants system any more than we could establish the benefits of its predecessor. We can make a judgment on the basis of evidence. We may be wrong. It may be a good or bad judgment. The evidence may be powerful or otherwise. But we must make a judgment. We cannot rely on scientific certainty in the way that the hon. Gentleman suggested. Nevertheless, I accept that we shall have to make an attempt to assess the effectiveness of the system. We have relatively short experience of the operation of the system—two years or so.
There are many incentives to invest besides the investment grant system: profitable demand; availability of cash; confidence in the future. These things, as hon. Members have said, affect investment decisions as much as the availability of investment incentives, perhaps more. The balance between these factors is very difficult to establish.
Then there comes the question of their effectiveness in development areas. The differential investment grant is not the only incentive to people to invest in development areas. There is the Regional Employment Premium, the Selective Employment Premium, the I.D.C. policy; all these things combine to make a total policy to increase employment in development areas. To select out one element and to ask what is the effect of this element

is very difficult. What one has to do is to see the results of the total policy. If it is possible to find indications of the effectiveness of one element, by all means do so, but we propose to study this—

Mr. Kenneth Baker: Is not this very disturbing? I agree that it is difficult to segregate one item, but the one item which the Government have segregated, namely, investments grants, will cost between £400 million and £500 million in this current year, and cost £425 million last year. It is disgraceful for a Minister of the Crown to say that he is sorry but he is not quite sure how effective this is; it is one of six factors. It happens to be the most expensive factor, and we want value for money.

Mr. Dell: I agree that it is an expensive factor, that we want value for money and that we should study this. One must also remember that a further factor which is effective both in development areas and outside is the general level of economic activity. I put it to the hon. Gentleman, as I put it to the House, that the investment allowance system also could have been studied and was not. We are proposing to study the effectiveness of this system as far as it is possible to do so, but I do not want to tell the House that we will study it and leave the House under any illusions as to the extent to which this question can be scientifically established in the way in which the hon. Member for Aylesbury required.

Mr. J. T. Price: When the Minister is carrying out this study, will he pay particular attention to the discrimination now shown in development areas in the payment of the 40 per cent. grant as against the 20 per cent. grant in respect of those industries already successfully established within the development areas? In other words, could not the Government effect considerable economies if they were less undiscriminating in the dispensing of public money and had regard to the needs or the capacity of the industries already there to engage new labour? With great respect to what the Minister has said, this is not being done, and it ought to be studied in depth.

Mr. Dell: My hon. Friend raises a point which links up with the question put to me by the right hon. Gentleman


relating to the effectiveness of the investment grants system in creating jobs. The investment grant is available on an asset. An asset is installed by a firm in order to maintain its competitiveness. By maintaining its competitiveness it maintains employment. Investment grants, therefore, are not just concerned with creating new employment; they are concerned with maintaining existing employment in competitive industry in development areas, and this must be borne in mind. The answer to the question how many jobs are being created cannot be given. Jobs are being maintained as well as being created. In the development areas we nave had over the last few years difficult problems associated with the contraction of various industries. It has been vitally important to create new jobs and also to maintain existing jobs, and where industry can be competitive to enable those industries to expand in development areas, based on that competitiveness. All these factors have had to be taken into account, and I cannot give an answer in the way the right hon. Gentleman wants to that specific question.

Sir K. Joseph: The Minister is bringing in R.E.P. and S.E.T. premiums, points which we did not raise. We are asking a simple question: will he isolate the projects of manufacturing investment for which investment grants have been given in development areas, and tell us how many new jobs have been created with them? That surely must be contained in the books of his Department.

Mr. Dell: Investment grants are paid not just on new projects; they are paid on existing projects, on new assets in an existing firm. This is the point which my hon. Friend was making.

Mr. J. T. Price: I am glad the Minister has come right to the point. I do not agree with the system and I have said so on numerous occasions in this House, and during the passage of the Industrial Development Bill which established the system I was a continuous and consistent critic of it. I am sorry that I was unable to join in the debate earlier in the day since there are far-reaching comments which I should like to have made.

Mr. Dell: I am well aware that my hon. Friend does not agree with this. I

have followed my hon Friend's comments on the system over the years. I do not agree with my hon. Friend. What we are concerned with here is investment in assets which replace other assets, and, therefore, one cannot give an answer to the question asked by the right hon. Gentleman any more than an answer could have been given to a similar question on the effect of investment incentives given in development areas under the previous Government.
Despite the qualifications which must be placed in advance on any such inquiry, we think that such an inquiry would be useful, and we are undertaking an interim appraisal with which industry will be associated.
There is, however, no question of investment grants ceasing. We must maintain the priorities on which the system is based. It is vitally important, as it was when investment grants were started in 1966, to increase the rate of investment of productive industries. Investment grants are the most important means of encouraging investment in those sectors which can do most to help the balance of payments.
The point was put to me that there is no evidence which can be produced in such an inquiry that the system was at all effective. This is a matter of judgment, and we shall perhaps learn more as a result of the inquiry which we are conducting. Nevertheless, in my judgment it is effective. This judgment is based on the contact which we have with industry; on the fact that the level of investment in 1967 and 1968 fell less than was to be expected and was prophesised in respect of that investment cycle; on the fact that we believe that the movement of investment is now upwards and on the level of investment in development areas.

Sir S. Summers: Will the Minister tell us what is to be the nature of the inquiry? I ask because the Committee of which I was Chairman asked the Department to find out if it was feasible to assess the effect of the system. There are two quite separate questions, and I should like to know which is to be inquired into. One question is: what is the effect of the system? The second question is: is it feasible to find out the answer to that? Which will he do?

Mr. Dell: Clearly, we have to do both. My earlier remarks about the difficulties of such an inquiry dealt with the second point made by the hon. Gentleman. It is difficult to assess the effectiveness of any investment incentive system, but this is a problem which we are trying to tackle. We shall do this as best we can, with all the limitations which such an inquiry must have, and industry will be associated with it.
Criticisms have been made about the fact that we are dealing with a large Supplementary Estimate. One hon. Member said that we are now dealing with a level of investment grant with an expenditure three times the original Estimate. The original Estimate for 1967–8 was £166 million. There was a Summer Supplementary Estimate of £60 million, and a Winter Supplementary Estimate of £89 million, making a total of £315 million for the year. The total Estimate for 1968–9 will be well over £400 million. This is not, as a matter of arithmetic, as much as three times £166 million, but in any case the original Estimate for 1967–8 represented payment on three-quarters of a year expenditure only, whereas the figure of well over £400 million represents payment on four-quarters of expenditure plus overspill from the previous year. There is the further point that the 1968–9 Estimate represents payments at the higher rates of 25 per cent. and 45 per cent., whereas the £166 million related to grants of 20 per cent. and 40 per cent.
I think that it was accepted that there is necessarily difficulty in estimating with absolute accuracy the level of investment grants in any financial year. Taking the position at the moment, for example, on which we would have to make an estimate for 1969–70, we have available to us esimates of the actual level of investment in the second and third quarters of 1968. In respect of the fourth quarter of 1968 and the first quarter of 1969, which is the period with which we are concerned in making an estimate for 1969–70, we have only forecasts based on Board of Trade inquiries. Here, to start with, is a major element of uncertainty.
There is also some uncertainty, until we gather greater experience, as to the proportion of expenditure in manufacturing industry which will qualify. These are factors of uncertainty which must have been associated with the system

of investment allowances also because, although they took the form of rebates against taxation, presumably the Government of the day wanted to know what would be the total in any year.
A second uncertainty has been the level of investment in the development areas as a proportion of the total. As has been said, we started with 20 per cent. We are now working on a figure of 33⅓ per cent. That in itself justifies the view that the system has been effective in directing more investment to development areas. But this is an uncertainty in the nature of the system until we get the proportion of investment reasonably well established.
Then there is the problem of the rate of claim, to which the hon. Member for Scarborough and Whitby referred and on which the Estimates Committee commented when it asked whether there should be a cut-off point because so many claims are put in very late. The hon. Gentleman argued that there should not be a cut-off point. We have a suggestion from the Estimates Committee, and we shall consider it. But again I must point out that a cut-off point would mean considerable difficulty for many firms who might otherwise find themselves out of time.
Then there is a temporary uncertainty which has made estimating more difficult, relating to the existence of the investment allowance option. On a substantial part of their expenditures in 1966 and, to a certain extent, in 1967, firms have been able to claim investment allowances instead of investment grants. It applies to expenditures on assets already contracted for when the grants scheme was introduced. It was uncertain how many firms would opt for investment allowances, rather than grants.
There is the further factor creating uncertainty that, at any given time, 10,000 to 15,000 claims are under consideration, representing grants of between £35 million and £50 million. It is only at the last moment that one can be sure how much will fall on one side of the line of the end of the financial year and how much on the other. However, I accept that we must make this estimate as accurate as possible, and I hope that, with the fuller figures that we will have for 1966 and 1967, as old claims come in and are dealt with and paid, we


shall be able to establish a much firmer basis for this estimating than we have succeeded in doing so far.
I was asked a number of specific questions by hon. Members. The hon. Member for Edinburgh, North (Earl of Dalkeith) suggested, though I was not entirely clear whether he spoke of investment grants or grants under the Local Employment Acts, that there should be a grant office in Scotland. There is a grant office in Glasgow, dealing with the whole of Scotland.
Then the hon. Member dealt with the difficulties that arise from the existence of development areas and the fact that they have; to have boundaries. I acknowledge those difficulties. The problem is how to solve them while maintaining development areas. Unfortunately, boundaries anywhere tend to create difficulties.

Earl of Dalkeith: My specific point is that we have one very small area excluded from the very large area of the development district. It is in such a case that these complicated problems arise.

Mr. Dell: I note the hon. Gentleman's point. However, difficult and complicated problems arise on the borders of development areas generally.
The hon. Member for Roxburgh, Selkirk and Peebles made a speech which, as far as I could understand it, was not on the subject that we have under discussion. He appeared to be speaking about grants under the Local Employment Acts, grants which were subject to B.O.T.A.C. inquiries, and delays in the making of building grants, all of which are most important subjects. Unfortunately, we are dealing with investment grants under the Industrial Development Act. I am afraid that Mr. Speaker would rule me out of order if I followed the hon. Gentleman into these areas of discussion.
The only point at which the hon. Member came on to the subject under discussion was when he referred to a firm whose complaint he has referred to the Ombudsman. It is a subject about which he has been in correspondence with me for some time and on which I will no more comment than he did, as he has referred it to the Ombudsman. I

might perhaps say in passing that I wish that he had reserved his comment in The Guardian, too, before referring it to the Ombudsman.
As far as I can see, the remainder of the hon. Member's remarks were not on the subject with which we are dealing, though I congratulate him on getting them in—

Mr. David Steel: If the hon. Gentleman feels that he cannot follow me into the subjects that I raised, perhaps he will consider replying to me in writing. Incidentally, my article in The Guardian was written in the hope of persuading him to change his mind long before I considered sending the case to the Ombudsman.

Mr. Dell: I am sorry that the article failed to persuade me. However, I will make a general point about small firms and investment grants. I recommend them to seek advice from investment grant offices, and then perhaps there will be less of the difficulty that this firm has experienced.
The hon. Member for Leicester, South-West asked me about the de minimis situation. There is the British Oxygen case. The appeal has been heard, and judgment has been reserved. We are waiting for the judgment. The hon. Gentleman will not expect me, therefore, to comment on the de minimis situation.
The hon. Gentleman also raised the matter of the scrap metal industry, which has been covered in Question and Answer in this House. I very much regret the distress that this causes the scrap metal industry. I accept its contribution to the economy, but I am afraid that within the policy of the Act I am unable to accept its arguments. I hope that I have covered the points which hon. Gentlemen have raised in the course of the debate.

Mr. Peter Blaker: I thought, from the answer to the intervention from my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), that the Minister would say something more about the point that, in spite of investment grants, investment in manufacturing industries has fallen and that investment in service and distributive industries has been buoyant. I have listened fairly intently, but I do not think that


the hon. Gentleman has said anything on this subject except that he feared that investment in manufacturing would have fallen more but for the grant. Is that the hon. Gentleman's only answer on this point?

Mr. Dell: That is part of my answer. The real test of the effectiveness of an investment grant system will come in a period of buoyant demand, such as we are now entering. The test will lie primarily in the level of investment in manufacturing industry achieved in such a period. The hon. Gentleman knows that we are now expecting an increase in the level of investment. The last Board of Trade sample review, which covers a wider sample than the Financial Times, makes that point, though I accept that the answers were probably not for the most part informed by the November measures. Nevertheless, we shall have a further forecast in due course, and I think that this will be the test. The hon. Gentleman should not underrate that there was not the expected fall in the level of investment during 1967–68. If he looks back at the forecasts made, for example, by the C.B.I. at that time, which led the Government to introduce the 5 per cent. supplement, he may begin to wonder whether the investment grant did not have a positive effect at that time.

Earl of Dalkeith: Will the hon. Gentleman look at the forestry industry and harvesting grants?

Mr. Dell: I will look at anything. But, as the hon. Gentleman knows, grants are available for forestry from the Ministry of Agriculture, for planting and maintenance, I think. I do not claim to be an expert on that matter. I think that grants for forestry are more appropriate to that Ministry than the Board of Trade, but I will think about it and write to the hon. Gentleman.
I have tried to deal as fully as I thought necessary with the questions which have been raised. I hope that the House will in due course be prepared to approve this Supplementary Estimate.

PENSIONS AND ALLOWANCES (SUPPLEMENTATION)

7.43 p.m.

Sir Brandon Rhys Williams: I beg leave to draw the attention of the House to the Supplementary Estimates under the heading Supplementary Pensions and Allowances. An additional provision of £33 million is sought by comparison with the original Estimate of £394 million. I calculate that this represents an increase of about 8 per cent.
It is not because of the amount itself that I feel it necessary to bring this matter to the attention of the House, but rather the way in which it is being spent. In support of the Supplementary Estimate we find that that sum is required partly for the higher numbers of beneficiaries. In passing, I should comment that we are informed that this additional £33 million will cover only 75 per cent. of the increase likely to be required this year. I cannot help asking myself where the 25 per cent. is to come from. I hope, and I feel confident, that we shall hear about that from the Minister. If it is to come from the £200 million which was lately transferred from the National Insurance Reserve Fund to the National Insurance Fund, a drawing on capital account which we were told would be brought in to ease the pressure on the current account, what sum will be released out of that £200 million to go into the pockets of the public before the end of the current financial year?
It is necessary to consider a little of the history of these special supplements. Those of us who have reread the Beveridge Report in recent weeks—if indeed we did not know it before—will recall that his recommendation concerning National Insurance was that it should abolish need. I think that the great man envisaged that there would always be some special cases as a residue which would have to be attended to by a special body, such as the Supplementary Benefits Commission or the National Assistance Board, because it is impossible to deal with the whole of humanity as standard cases. But I do not think that Beveridge ever envisaged that we would use the special supplementary system on the present scale.
Let us look at the growth record in the numbers drawing special benefits. In 1949 it was the already tragic total of 1,157,000 people. In considering these figures I suppose that we ought to take into account too the dependants of the people who are the beneficiaries of this form of assistance. By 1959 the figure had grown to 1,766,000, and in November, 1968, the latest date for which we have accurate figures published, it had risen to 2,637,000, of whom I calculate that 1,847,000 were over pension age.
In January, 1969, those of us interested in the subject avidly read the White Paper on National Superannuation and Social Insurance in which the total of pensioners receiving special supplements is given as 2 million. With the number receiving special allowances as well, we have a figure approaching 3 million people who must be dependent on special assistance of one kind or another.
It appears too, that the cost of paying for special supplements has doubled since 1962–63. When considering this very large number of people—if it is not 3 million, it is certainly in excess of 2½ million regularly in receipt of special supplements—I cannot help asking: how can they all be special cases? It seems beyond the bounds of acceptability to reason that all these 3 million people are special cases.
About six months ago I was informed in this House that the staff of the then Ministry of Social Security was handling about 6¼ million claims per annum for special supplements. It is an impossible task to do the case work of 6¼ million claims per year, and I feel that it is a crying scandal that it should be necessary.
A week or two ago a newspaper reported me as using the word "impersonal" about one of the branches of the Ministry of Social Security. I should like to make it perfectly clear that when I used the word "impersonal" I was referring to the machinery, not to the people who have to handle this enormous volume of work. I have nothing but praise for the people who try to tackle this virtually impossible burden of individual case work. They are doing a magnificent job with good temper and perception and a sense of duty which is matchless. I hope that the newspaper which reported me before will report me again in that context. I claim that the

machinery is impersonal because it is using this system of special supplementation in a way that was never intended.
From such case work as I have been able to do, and by drawing on the advice of people who are much better able to judge than I am. I think that the real number of genuine special cases who are probably in need of assistance of this kind may be about 250,000, that is to say about one in ten of the people who are at present getting supplementary benefits. All the others are straight forward, or relatively straight forward cases of people who simply cannot manage on their National Insurance. For how long is this machinery going to be misused? From the very large sum which is applied for in this Supplementary Estimate it seems that for the present at all events there is to be no limit to the number of people who will be dealt with on a non-contributory basis.
Though the White Paper was launched as something "better than Beveridge", I suggest that it should, rather, have been described as an attempt to catch up with Beveridge after the 25 years which have elapsed. I resent the existence in our midst of this large number of people who are in receipt of means-tested charity. Do not let us mince words—that is what it is. I resent it, because to me it seems clear that first and foremost it undermines the saving habit.
If, when someone gets to retirement age, because he has accumulated a certain amount of personal property—I know that there are certain disregards, and I shall return to these—he is not entitled to help from the State, but a man who has virtually no assets when he retires is helped, those who retire without having saved anything are bound to think that they have had a better bargain out of life than the people who have been so foolish as to put money aside.
The present system not only undermines the saving habit. It is also a direct cause of dis-saving. Though the dis-regards are administered with all the mercy that goes into the system, and with all the concessions that go into it, yet the operation of the supplementary benefit system must introduce an element of dis-saving. If there is one thing which is vital to our economy it is to restore to the public the savings habit, and to put an end to the trend, which is gathering


speed, towards dis-saving. The Government simply present us with this Estimate and say nothing about the way in which they intend to tackle this problem.
I said that I should return to the question of the disregards. Some time ago I read—it stuck in my memory, and I believe that it is still true—that if a person has assets other than his house of about £2,000, that is taken to be within the limits of the disregard, but the Ministry is not able to inquire what his actual income is from the capital asset of £2,000. The Ministry is obliged to deem that the income from that asset is £7 a week—140s. a week. If anyone in the House knows a stockbroker who can advise me how to invest £2,000 so that with any reasonable degree of security I receive an income of £7 a week, I hope that he will take me to him at once. Remembering the sort of investment into which people who have small resources normally go, I calculate that this provision of the so-called "disregards" requires the pensioner to dis-save at the rate of about £5 a week.
I also object to the presence in our society of this large number of people in receipt of non-contributory means-tested charity, because it undermines their self respect. I know the reason why the first Minister of Social Security, with the best motives, decided that this was the way, in the short run, in which the problem had to be tackled. But the short run is turning into the long run. I think that to some extent one might say that good work was done in the short run in persuading people who up to that time had refused to apply to the National Assistance Board for special help even though they needed it, that rather than continue below the level which society regarded as the subsistence level they should swallow their pride and go to the office and ask for public help. I believe that about 500,000 people are now doing that who were not doing so two or three years ago. I am glad, in some cases, that they are doing that; and yet I am sorry that it should be necessary for them to do it. One still meets many people who say, "I shall manage on what I have, plus what I get from my National Insurance, but I am damned if I am going on my knees to the office to ask for more". These people are

foolish by the standards of our generation, but I love them, and I wish that there were more of them.
We are tackling poverty in the wrong way and this Estimate takes us further down the same road. The tragedy is that all hon. Members would accept that. Everyone concerned with the social services must want to know specifically how the Government intend to reduce this growing number. Like others, I waited with the greatest anxiety for the Government's White Paper, from which we hoped for so much. In no party spirit, I say that it is bitterly disappointing because of the things that it leaves unanswered, particularly what to do about people in real need now.
This is not the time to discuss the White Paper in detail—I hope that I may be able to speak on it soon—but in it we can discern the broad outlines of the Government's policy for dealing with need. It is to give the most money to the people who already have the most. That is what graduated benefits mean. The scheme which the Government have in mind to introduce not sooner than 1972 aims to concentrate help not where it is most needed, but where it is least needed. This is a cockeyed sense of priorities. The Government show no sense of urgency and no appreciation of the need by publishing a White Paper in which 1972 is held tantalisingly in front of people who will probably be dead by then. And nothing specific is said about the ways the Government propose to help the rising number who now cannot manage on their own resources.
Graduated contributions are right in principle, because they adhere to the principle of equal shares—the millionaire can pay his proportion towards National Insurance just as the widow does, with her two mites. But graduated pensions are the wrong solution and will do nothing to solve the problem which the Estimate is trying to tackle. If the Government introduce such a system, it will help the poorest only where it slips in some element of redistribution as an incidental, in other words, if it defies the logic of its own mathematics by taking money away from people who, according to the strict application of the system have an entitlement, and hands it downwards to those whom we are discussing, at the bottom of society.
The right solution, as it always was, is the Beveridge solution, to give flat-rate benefits which are enough. Then we would not face this type of alarming increase, in which it is proposed that tens of millions of public money should go down the wrong road.
But I hope that I can prove myself a realist by qualifying that in one respect. I realise that, for people without large personal resources, rent is one of the most important elements making for variation in need from place to place and from family to family. From the Government's publications, I deduce that the allowances given to those receiving supplementary benefits and living in houses owned by private landlords in 1967 were 33s. 5d. on average per week because, no doubt, of the application of rent controls. For those in local authority accommodation, the figure was 42s. 4d. The figure for owner-occupiers was about 20s. 9d.
Yet I am sure that the Parliamentary Secretary knows that, in central London, £4 4s. is not regarded as unreasonably high in certain circumstances for a single person, while a married couple may regularly be paid £5 15s. and sometimes more. That shows the variation, from one place to another and one type of accommodation to another, which rents are bound to cause.
If we took the Utopian solution of giving universal flat-rate benefits to everyone in retirement, we should have to take into account these extreme variations, so I would agree that, at any rate in the short run, in accepting the Beveridge principle, we should do as the great man himself envisaged we might have to do, something special about rents. In this, some rudimentary case work is probably necessary.
The nub of the objection to my recommendation to raise National Insurance across the board rather than special supplements is the total cost. But I should like to ask the question: can we afford not to meet our commitments? The generation which is making these regulations about pensioners is simply profiting from the effects of inflation. A former Prime Minister said that we must not forget the old people, because they had brought us to where we are; but we are forgetting them by forcing them down

to the level of means-tested, charity-aided supplicants.
One of the origins of the problem is that National Insurance is not properly funded. On all sides we see the weakness of people dependent on unfunded schemes, who cannot say, "This asset, or this share of this asset, is mine", but who must say, "Because the cost of living has gone up, I can no longer live on what I thought was enough, so therefore I have some sort of claim." But the majority of voters are all too frequently deaf to these claims.
If we are to use the principle of repartition—I make no apology for using that useful old English word, which means precisely what we will have to discuss when debating the Government's White Paper—if we use the principle of repartition or "pay as you go" provision for pensioners, we had better learn from the French the principles by which they administer such schemes. It is no good using the notion of a fund which is not a real fund and then drifting completely away from principle in dealing with people who have claims upon us because of their earlier contributions which were spent at the time and not funded.
It is wrong to say to such people, "We waive your claims, but deal with you instead by gigantic Supplementary Estimates." We cannot afford not to meet our National Insurance commitments as a generation, because we ourselves will one day be pensioners. When we consider how we are treating our own old people, are we able to make such a claim on our children that, when we retire, we shall be entitled to a fat living? We are all disgusted by the spectacle of old people in second-hand clothes picking up cigarette ends, but it can be seen any day in Oxford Street. This is the society in which we are content to live. How can we criticise the young people and the "cadgers" about whom we hear so much, when we ourselves are also paying such scant respect to our elders?
The other question which arises over the problem of cost is this: what would be the extra cost of a flat-rate increase in National Insurance? We know that the Government's method appears to cost £33 million. Of course, by the old-fashioned method of accounting, to increase National Insurance benefits across the board would seem to cost much more


to the central Budget. National Insurance has become so inextricably muddled with the rest of the Budget that no one understands it and so it is resented. It makes it almost impossible to raise contributions if people do not know where the money goes.
National Insurance is paid for partly by the contributors themselves. There is a substantial Exchequer grant of hundreds of millions of £s and we are told that, at the present rate, employers are also paying well over £1,000 million a year. I am not against employers being asked to contribute to the Welfare State, but it is hard to specify exactly what they are getting out of it. This is wrong. In spite of all these extraneous contributions to National Insurance from the employers and the Exchequer, it still does not cover more than a fraction of the cost of the Welfare State.
Our way of thinking about our income and expenditure on welfare stems from our confusion over the purposes of taxation. Taxation by central Government should be seen to be of two kinds—

Mr. Deputy Speaker (Mr. Harry Gourlay): Order. We are this evening discussing not taxation, but the Supplementary Estimate on page 39. The hon. Member must not refer to questions of taxation.

Sir B. Rhys Williams: I accept your Ruling, Mr. Deputy Speaker, but I thought that I would be criticised if, having dealt with an alternative method of coping with real need—a need which has resulted largely from the rises in the cost of living which have occurred in recent years, I did not recommend how the alternative I am recommending should be financed. I trust that I will be allowed to develop this theme to the extent—

Mr. Deputy Speaker: Order. The Chair must obey the rules of order. So must the hon. Gentleman.

Sir B. Rhys Williams: I naturally bow to your Ruling, Mr. Deputy Speaker.
In the explanation which the Government give of their policy which lies behind these Estimates, I trust that they will show that they are working towards the concept of contribution as being the

source of the money which is distributed to those in need and to pensioners. While they continue with the 19th century pattern of paying money by means-tested charity rather than as of right, this problem will continue.
In dealing with the National Insurance system the Government have a duty to show what is happening to the contributors' money; from whom the money is coming and to whom it is going. I would like National Insurance to be separated from the rest of the Budget accounts so that one can see the income and the benefits clearly, and define precisely who is paying for what and how.
Insurance is a system for transferring money from the fortunate to the unfortunate as of right. At present the Government are transferring money from the fortunate to the unfortunate, but they are giving it to them not as of right but as a so-called special supplement. Why not, therefore, return to the insurance principle and make it work? This would give the pensioners back their self-respect and if, in the process, National Insurance would be giving somewhat more money to those who are not in actual need, at any rate it would not be falling into the error of giving the most money to those who are not in any need.
I suggest that it would not be inappropriate to have an across-the-board increase in National Insurance benefits as a means of enabling everyone to fend for himself in retirement. For those who are not in actual need such an increase should be seen as a form of reduction in taxation in old age. After all, what one pays in and what one draws out are the two sides of a life-long relationship with the State. In the same way, one cannot look at one side of a tennis court when a game is in process and understand the game. The tennis ball goes to and fro across the net and one must watch its progress in both courts if one is to comprehend fully what is going on. The same applies when we consider what each individual pays in and what he draws out from National Insurance.
I hope that the Government will say explicitly in the near future what they intend to do to stop the advance of this retrograde movement into special supplementation, by which more and more people are being obliged to go down to the office for charity.

8.14 p.m.

Mr. Evelyn King: I am sure that the House—I wish there were more hon. Members present—will be grateful to my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) for raising this subject. I was sorry that the rules of order did not permit him to give a full analysis of his solution, for I was anxious to hear it. I shall not attempt the sort of tour d'horizon which he made. Instead, I will expound two cameos on a point of principle, and both derive, certainly in part, in my constituency.
The first example arose as I was canvassing during the last election. I visited two old ladies living next door to each other, both over 70 and both pensioners. Each was angry with the other and each had a grievance. The first on whom I called was in receipt of supplementary benefit. Her grievance was that, in her view, she was not receiving sufficient to meet her needs, and about that she was angry.
The second old lady, who had known the first throughout her life but was no longer on speaking terms with her, was furiously angry because although throughout their working lives they had earned more or less the same income, the second old lady had contrived to save—not a great deal; something in excess of £1,000—and as a result received no social benefit at all. Meanwhile, of course, her next-door neighbour was drawing a benefit to which the one who had saved objected. After all, had she been less provident, she, too, would have been entitled to benefit.
To whom should our maximum sympathy extend? My sympathy goes to the second who having saved throughout her life, and having shown the virtue which we are always being called upon to show, gets no reward. That is inherent in the system which we are entitled to debate and criticise tonight.
My second point concerns a totally different matter which increasingly alarms me. It is the number of not old but young, sometimes very young, who throughout the summer months—I refer to 17, 18 and 19-year olds—go to seaside resorts in the south of England, who sleep rough under the pier, who indulge in other habits which are undesirable but

which are not germane to this debate and who spend the occasional night in a lodging house to secure an address, after which they queue for social security benefits to enable them to live that sort of life.
That was not the purpose for which social security benefits were designed. I am utterly sure that, however much sympathy we may have for the old, the ever-increasing amount which we dish out to the unworthy is something which we must soon investigate and seek to diminish. We cannot consider these points without seeking to establish some sort of principle about the duty of the State. I have no doubt that its first duty must be to bring aid at the sight of poverty or want carried to the point of hunger. The same can be said of housing which is below a certain standard. It must be the function of the State to ensure that such abuses exist no longer, rescue the needy and come to the aid of those who cannot control their own lives.
We all agree so far. The quarrel begins at that point, for I would not admit that it is in any sense the duty of the Slate to come to the aid of those who are not in need of such aid. This is where we come up against the scheme outlined by the Minister last week, in which it is proposed to set up a huge apparatus—

Mr. Deputy Speaker: Order. We are discussing not a scheme outlined last week but the Estimates before the House. We are discussing whether the amount in the Estimates is sufficient or otherwise.

Mr. King: I should have liked to discussed how that money is to be used and to point out that it is not the function of the State to give this money, whether in the form of pensions or supplementary benefits, to those whose means are such that they no longer require it. I accept your Ruling, Mr. Deputy Speaker. I cannot develop the point, but it was worth making.

8.20 p.m.

Mr. Tim Fortescue: The House will be most grateful to my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) for giving us a preview of some of the debates we shall have in the comparatively near future on the whole field of


social security, pensions and National Insurance. But for your intervention, Mr. Deputy Speaker, at one time he was about to tell us of his eloquently written and well prepared scheme for a new social contract which so many of us have studied with care and admiration. I should like to have heard him on that, but in the circumstances I well understand why that was not possible.
My hon. Friend took us back to Beveridge, the pure wine undistilled of that great man, as he called him. I am sure we all bow to the great memory. He told us that in his view any new scheme should be arranged rather differently from the arrangement proposed by the right hon. Gentleman the Secretary of State for Social Services. That will be for another day. There will be much opportunity to discuss these matters then.
My hon. Friend the Member for Dorset, South (Mr. Evelyn King) gave us vivid examples of the incongruous way in which the present system sometimes works. His examples of its impact on the old and the very young were especially pertinent. I speak with a little experience in that I was privileged to spend some time in an office of the Ministry of Social Security in my constituency last summer. I remind my hon. Friend of the very considerable difference which the pronouncement made by the then Minister of Social Security on 25th July last year has made to this problem of benefits being claimed in an unwarranted fashion especially by the young. The House will remember that on that date the right hon. Lady said:
I have become increasingly concerned about the very small minority of people who are abusing social security provision."—[OFFICIAL REPORT, 25th July, 1968; Vol. 769, c. 213.]
She went on to say that she was determined to ensure that supplementary allowances are not paid to those who while unemployed are not genuinely seeking new jobs.
I found when I arrived in the local office of the Ministry in Liverpool in September that the policy she outlined in that statement was already beginning to have effect. I was very impressed by the way in which officers behind the counter and in the back rooms of the office were determined to stamp out abuse and were greatly strengthened in

their determination by the way in which the right hon. Lady had spoken in the House.
There are, however, two ways in which abuse of the system still exists. If they could be eliminated Supplementary Estimates of the kind with which we are faced would not be so necessary or at least the sums asked for would not be so great. In her statement last July the Minister referred specifically to fit young single persons who would be told and are being told that when work is available in their locality they should be able to find it within four weeks, if they did not find it within four weeks they would not be paid any more supplementary benefit. This policy was being shrewdly administered at the Ministry's office when I was there.
The phrase "in their locality" worried me because there seemed no reason why fit young single persons should not work elsewhere. Why should they not take up jobs at some distance from their homes? Why should a fit young single person have to remain for the whole of his life in his locality? We have to come many hundreds of miles from our homes to do our job: I cannot see why fit young single persons should not do the same rather than drawing the charity of the State when a job is not available for them on the doorstep. In pursuit of this I asked a Question on 27th January. I asked
Does the Minister agree that for a young, fit, single man without family responsibilities, supplementary benefits should be curtailed not merely if there is suitable employment in his locality, but if such employment is available at any distance up to, say 100 miles?
The Minister of State replied:
that is indeed part of the policy which is being applied.
I was delighted to hear that because I thought my point had been conceded but then one of the Minister's hon. Friends was rather worried and asked:
When looking into this problem, will my right hon. Friend consider the position of a person sent to work at another place where train services are being cancelled or abolished altogether, making it almost impossible for him to work at a distance of up to 100 miles, as suggested by the hon Member".
The Minister replied:
Certainly the availability of travel facilities should be taken into account in all these cases".—[OFFICIAL REPORT, 27th January, 1969; Vol. 776, c. 911–12]


It was not my intention to suggest that any man should travel 100 miles to and from work every day although some commuters in the London area I believe travel for almost that distance. I suggested that young men should take up residence at the place where a job was available. Why should they live at home on charity? I should like the Under-Secretary to reply to this point.

The Under-Secretary of State for Health and Social Security (Mr. Norman Pentland): Is the hon. Member suggesting that he would be in favour of direction of labour, for that is what this amounts to?

Mr. Fortescue: No, it would not amount to that. Perhaps theoretically it would, but I suggest that if there is a job somewhere in the country and a fit young single person somewhere else, he should be told that if he did not take up that job he would not be paid supplementary benefit. I do not say that he should be told to go there.

Mr. Pentland: That is the very essence of direction of labour which to the best of my knowledge hon. Members on both sides of the House have always abhorred. I apologise, Mr. Deputy Speaker, for going far beyond discussion of this Estimate, but surely that is what the hon. Member is suggesting.

Mr. Fortescue: I will give an example to show that that is not what I am saying. Last year during my visit to the Ministry office in my constituency a young man came to the office He had four "O" levels, was 20 years of age and left school when he was 17. He had worked for six months and then lost his job and had not worked since. He lived at home on supplementary benefit. When I asked what he did all day he said he helped his "mum". We, the taxpayers, were paying for him to help his mum all day. I said casually, "What would you do if I said to you that we had had enough of this and would not pay you supplementary benefit any more for staying at home and helping your mum? "There was no question of lack of means in this case: the boy came from a comparatively well-to-do family. He looked at me in horror and said," But you cannot do that" I said, "I do not think I can, but I am asking you a theoretical question. What

would you do?" He said, "I would get a job".
I say that the work-shy—and, by definition, as was stated by the previous Minister, we are talking about the work-shy—would find themselves jobs if their supplementary benefit were to be curtailed in these circumstances. I do not say that they must be told where to go to find jobs. I say that this charity about which we are talking should not be given to them if there is work available for them.
That is the first form of abuse which I believe could be eliminated or greatly reduced, thereby reducing the need for the Supplementary Estimates.
The whole House is worried about abuses of this kind. The former Minister expressed her concern. There is no political point in this. The abuse of social security provisions brings the whole sysem of social security into disrepute. This is bad for the system and bad for the House.
My second worry is that I found in the office of the Ministry of Social Security that the one case of abuse which officials were powerless to interfere with, where they knew that they were being deceived by the claimant but could do nothing about it, was that of the man with a doctor's note who claims sickness benefit. This is the man who comes in waving a doctor's note and grinning all over his face and saying that he is claiming sickness benefit because the doctor says he is sick.
I made some inquiries among Liverpool's doctors about this matter. The ones to whom I spoke—I admit that it was not a great number, only three or four—admitted to me entirely freely that on many occasions they had given notes to claimants for sickness benefit without being certain whether the men were sick.

Mr. Pentland: Then why did they give the notes?

Mr. Fortescue: They gave the notes for several reasons, the combination of which they found irresistible. The first was that there are conditions which cannot be checked in a brief interview in the consulting room. If a man comes to the consulting room and says that he has a backache, how does the doctor check that he has a backache? The


second reason is that many of the patients, if not all of them, are social acquaintances of the doctors, and it is difficult to refuse a sickness note to someone whom you will see socially that evening.
The third reason is that the patients on a doctor's panel are his means of livelihood. If he loses patients, his income obviously diminishes. He does not want to acquire a reputation in the neighbourhood for being the kind of doctor who will not give sickness notes. The fourth reason, which hon. Members may not believe, is that there are examples of doctors' windows having been broken in Liverpool when they have refused to give sickness notes. These four reasons add up to a fairly formidable catalogue.
So on 21st October last I asked the then Minister of Social Security
whether she will introduce arrangements whereby medical certificates supporting claims for sickness benefit must be signed by salaried doctors rather than by general practitioners whose practice depends on the good will of their patients",
The right hon. Lady replied, as I expected:
No. Sickness benefit is paid for incapacity for work and the person best qualified to certify whether a patient's condition is incapacitating for work is the doctor who is responsible for diagnosing and treating that condition."—[OFFICIAL RL'PORT, 21st October, 1968; Vol. 770, c. 209.]
I have not taken the matter further, but I still believe that there could be ways and means of overcoming this problem. There must be available in the Ministry's statistics figures showing what illnesses and conditions are mostly claimed for. For instance, the 1967 Report of the Ministry shows that over half a million claims for sickness benefit were referred to regional officers of the Ministry. Of that half million, 55 per cent. were upheld—that is, the men and women were found to be incapable of working. By my simple arithmetic, in 45 per cent. of cases the claims were not upheld, nearly a quarter of a million were found to be capable of work, though they had been given sickness benefit notes by their doctors.
Would it not be comparatively simple for certain conditions to be referred automatically to the regional medical officers, and not at the request of the doctor as

now? Would not that be a way of reducing the abuse which undoubtedly exists? The people behind the counter in the Ministry's offices would tell the hon. Gentleman which conditions should be covered in that way. They know. If he talks to his officers and to a few doctors in the big cities, the extent of the abuse will rapidly come home to him.
I have tried to make a few practical suggestions showing how Supplementary Estimates of this size and nature could be reduced or, perhaps, even eliminated in the future.

8.35 p.m.

The Under-Secretary of State for Health and Social Security (Mr. Norman Pentland): I listened carefully to what the hon. Member for Kensington, South (Sir B. Rhys Williams) said and to his various suggestions for reformulating our system of social security provision. I imagine that the hon. Gentleman will agree that it is impossible for me to enter upon a detailed discussion of the ideas which he has put forward in a debate of this nature falling within a narrow compass. As he said, there will be other occasions when we shall discuss many of the topics which he raised.
The hon. Member for Dorset, South (Mr. Evelyn King) referred to what he called the unworthy people who receive Supplementary Benefit. He has raised this matter with me on more than one occasion, and I am sure that both he and his hon. Friend the Member for Liverpool, Garston (Mr. Fortescue) realise—the hon. Member for Garston accepted it—that we in the Ministry, particularly on the supplementary benefit side, do all we can to end abuse.
I was more interested in the ideas of the hon. Member for Garston about how young people could be expected, with pressure—that pressure being the stopping of their only means of livelihood—to move from one part of the country to another. I could never agree with him about that. However, I should be straining the patience of the House if I were to stray into a discussion of what we regard as the ethics of the direction of labour. In that connection, we should have to have regard also to the direction of industry. The two go hand in hand. The hon. Gentleman raised far too wide a topic for this debate.
I imagine that Liverpool doctors, although the hon. Member for Garston spoke 10 only three or four, will be interested to see what he said tonight. No doubt, they will have ways and means of coming forward on that matter.
In all these cases, as we have said time and again, we recognise that there is a tiny minority who abuse the system. One can find abuse of our social security provision in all its forms. But we must not overlook the decency and honesty of the vast majority of people, who in some cases have to be encouraged again and again to claim what they are rightly entitled to in social security provision. Further, we have said that if any hon. Member knows personally or has evidence of abuse and if he will pass his knowledge or evidence to the Department we shall by all means have it fully investigated. The hon. Member for Garston accepts that that is so. He knows that these cases are carefully scrutinised by our officers, who do everything possible to try to end abuse.

Mr. Evelyn King: I fully understand the hon. Gentleman's difficulties, and I am not unsympathetic, but my point was quite distinct from that made by my hon. Friend the Member for Garston. There is no question of direction of labour. I am concerned about the number of young men and women who deliberately, of their own will, leave their homes during the summer, come for two or three weeks to a seaside resort with the idea of enjoying a holiday, and then go on supplementary benefit. That is the point. The direction of labour could not possibly come into that.

Mr. Pentland: Of course, I could not generalise without the evidence before me of the circumstances of these young people. I should think offhand that it was perhaps a question not so much of enjoying a holiday as possibly of some mental deficiency, for example, which makes them leave home. We have to remember that we do have this type of people in our society. We do have "drop outs". I am sure that some of them migrate to the south of England just as others migrate to London. But if the hon. Gentleman has evidence, as he seems to have, and will send it to us, we will have it. thoroughly investigated. This is the kind of help our officers

would gladly welcome in order that we could get to these cases.
It may be helpful if I now explain the basis of the Supplementary Estimates for supplementary benefit. The hon. Member for Kensington, South referred to the transference of money from the National Insurance Reserve Fund. He probably knows that supplementary benefits are financed from general taxation. They are not financed from any contributions. There is, therefore, no question of using any money transferred from the National Insurance Reserve Fund to the National Insurance Fund to meet the extra cost of supplementary benefits such as we are discussing.

Sir B. Rhys Williams: The hon. Gentleman has not explained where the 25 per cent. is coming from.

Mr. Pentland: I will deal with that. The original estimate of the net expenditure on supplementary benefit for the year 1968–69 was £394 million. The additional provision which has been under discussion this afternoon is £33 million. The greater part of this increase is, of course, the direct result of the decision taken by Parliament last summer to raise the supplementary benefit scale rates with effect from 7th October, 1968, for the 2½ million beneficiaries.
The leading rate—that for a single householder—was put up by 5s. from 86s. to 91s. a week. Other rates were increased in proportion and there were improvements in certain other features of the scheme. For example, the long-term addition to the rates for people over pension age and certain other beneficiaries was raised from 9s. to 10s. a week. The cost of these changes introduced last October is expected to amount to £24 million in the period up to the end of the current financial year.
A further £11 million was asked for not on account of the changes in the scale rates themselves but because of minor variations in the number of beneficiaries on the average payments which they are receiving. The net figure is, however, only £33 million, not £35 million, because of an expected increase of £2 million in Appropriations-in-Aid—that is receipts, mainly by way of arrears of National Insurance benefit, and payments from liable relatives.
For certain groups of people these levels are slightly higher than was originally expected. The House will appreciate that since the average payment is the net result of setting on the one hand a person's requirements—the appropriate scale rates, rent, and any special needs—against his resources, such as National Insurance benefit, on the other, changes in the range of resources or the level of requirements can affect the average payments even though the scale rates themselves remain unaltered. I think that that is the question about which the hon. Gentleman was concerned. It is in respect only of that extra expenditure that £11 million was expected to be about 75 per cent. of what the hon. Gentleman mentioned as the expected additional amount needed. The full cost of the uprating during the present financial year has been allowed for. It is stated in the Supplementary Estimate.
Perhaps I may remind the House of the circumstances which led to the increase in supplementary benefit scale rates, and thus to the major part of the Supplementary Estimate that we are discussing. On 16th January, 1968, my right hon. Friend the Prime Minister, speaking in the context of measures following devaluation, pledged the Government to protect the most vulnerable classes of the community from hardship resulting from the effect of devaluation on import costs. In fulfilment of this pledge the Government brought into effect last autumn increases in family allowances, in the qualifying levels for rate rebates and in the rates of supplementary benefit. I have already quoted the main increases in benefit which produced in October, 1968, an increase over the rates introduced in October, 1967, of rather under 6 per cent. As intended, this covered the increase in prices over the same period.
What this meant is that the significant advance in standards of non-contributory benefit which the Government have introduced since they took office in October, 1964, have been maintained despite the grave economic problems which face the country. Thus, in real terms, the main rates of supplementary benefit are a fifth higher than they were in October, 1964, even if no account is taken of the

long-term addition. This addition was introduced when the Supplementary Benefits Scheme began in 1966 for all old people on benefit and for people below that age, other than the unemployed, who had been on benefit for two years or more. It is now payable to about 80 per cent. of the beneficiaries on the books of the Supplementary Benefits Commission at any one time, and was raised from 9s. to 10s. in October, 1968. Taken together with the other improvements made when the Supplementary Benefits Scheme started in 1966, all this has marked a real step forward in providing help to many of the poorest in the community.
It is worth considering for a moment to whom these benefits go. By far the largest number, or about 70 per cent., of supplementary benefit recipients at any one time, are old people. The next largest group—about 12 per cent.—are the sick and the disabled, just over half of whom are also receiving national insurance sickness benefit, while most of the remainder are the congenitally sick and handicapped who have never been able to work.
Then come the unemployed, under 9 per cent., followed by fatherless families, including National Insurance widow beneficiaries, with about 6 per cent. Finally, there are certain smaller groups such as childless widows and people who are staying at home to care for sick or aged relatives. All these groups have been helped by improvements in supplementary benefits, while poor families where the father is in full-time work, together with people whose supplementary benefit is "wage stopped", have been helped by the Government's family allowance improvements and other innovations such as rate rebates. These have also benefited many old people just above supplementary benefit level.
The improvement is supplementary benefit standards, which the Supplementary Estimate under discussion helps to maintain, has, naturally, led to an increase in numbers on benefit in most of the groups mentioned above. This has been added to by other factors, in particular the effect of the new scheme of 1966 in attracting people who may have been reluctant to claim. As a result, to take the largest increase as an example, the


number of old people claiming supplementary benefit is now some 400,000 more than it was before the scheme began.
I realise that at first sight it may seem odd to be talking in terms of the increases in the numbers on supplementary benefit when the Government have just produced a White Paper advocating a new scheme of contributory benefits whose long-term aim is to reduce very substantially the numbers on supplementary benefit.
Again, I come to a particular point raised by the hon. Member for Kensington, South. He raised the White Paper figure of 2 million retirement pensioners receiving supplementary benefit. This includes the wives receiving supplementary benefit. The figure of 1,848,000 old people receiving supplementary benefit at November, 1968, does not include wives, since they are included with the husbands. It also includes about 170,000 old people not receiving retirement pension. This is not the time to discuss in any detail the new Government proposals, but I should explain that there is no inconsistency in this situation.
The Government consider that for the long term the contributory system is the right way to go. But a new contributory system cannot be brought into effect overnight. It cannot cover people who have not paid contributions under it, and it cannot cover all possible misfortunes of life. For all these reasons the Supplementary Benefits Scheme has a key rôle to play, in the view of the Government, even if the extent of this work will in the long term decline. The Government are determined to provide the best supplementary benefit scheme they can to carry out these tasks.

DRIVING TESTS (APPLICATIONS)

8.54 p.m.

Mr. Edward M. Taylor: The Chair is usually very kind and generous in selecting as part of the Supplementary Estimates debate something to do with transport. Over the years quite a number of items have arisen under this heading. One of our friends absent this year is the British Railways deficit increase. This is one of the few Supplementary Estimates debates at which I have been present when we have not had to allow some extra additional sum for the extra loss of British Railways. This year we do not have one, and perhaps the Minister might not think it amiss if we were to convey our good wishes and congratulations to British Railways for this change. My hon. Friend the Member for Finchley (Mrs. Thatcher) and I visited the railways recently, and were impressed by the changing morale and outlook there. I hope that this will be a permanent feature.
We are considering Estimates of £162 million. The item which I wish to discuss concerns only £700,000. While we lightly agree to the spending of millions of pounds, it is only when we turn to relatively small figures that figures become meaningful. I wish to discuss a meaningful figure. These Estimates need to be probed, and there are quite a few questions which must be answered which I hope the Minister will be able to answer.
The sum of £700,000 is the shortfall in anticipated revenue from driving licences. This may not appear to be a large sum in a great nation like ours in which millions of pounds are spent every hour. But the fact that the difference between the original Estimate and the present Estimate is no less than 18 per cent. of the anticipated revenue gives some idea that £700,000 is a figure of significance. I have asked for this debate, and I am grateful to you, Mr. Speaker, for selecting it, because reasons should be given for this sudden change. Those reasons are not apparent from the Estimate Committee's Report, which I have read with some care, or from the evidence which was given before the Committee.
One spokesman for the Ministry said in evidence before the Estimates Committee that this change was "somewhat to


our surprise". This understandably surprised the Ministry. After years of buoyancy and growth in the numbers of driving licence applications, there is suddenly a change—not just a change in direction from increase to decrease, but a decrease in revenue of 18 per cent.
There was one reason given for this, namely, that there had been a delay in increasing the driving test fee from £1 to 35s. It was a delay of only one month, and it was estimated that the maximum amount which this would account for was £130,000. When £130,000 is taken from £700,000, there is still a lot of money to account for—well over £500,000. It was indicated in the evidence that after the fee was increased, as well as before, there was a remarkable change in the numbers of applications.
One question which was asked by the Estimates Committee was whether the increase in the fee from £1 to 35s. had been referred to the National Board for Prices and Incomes. The reply was:
The implications of this increase were very carefully considered by Ministers.
One of the reasons for the change hinted at by the Ministry officials and by members of the Committee was that perhaps we had got over the hump and that the numbers of older people taking tests were beginning to be phased out. That might be a long-term factor to which we should have regard, but it could not account for such a dramatic fall in the number of applications. Another reason which was advanced was that perhaps people were deciding not to go forward for tests until they were ready for them. That is a matter of change in human disposition and human feelings, and I suggest that that is not the sort of factor which can operate within a year.
Therefore, the reasons which have been hinted at, and perhaps advanced, are not sufficient in themselves to justify or explain a very sudden drop in the number of applications for driving tests. I am not advocating that more people should take tests, or that fewer people should take tests. I want to investigate the reasons, and I would ask the Joint Parliamentary Secretary to say if the reasons I put forward for this sudden drop are the right reasons.
One reason, which I almost hesitate to mention in view of certain events of recent days, is the sudden dramatic increase in the burdens of tax on road users—

Mr. Deputy Speaker (Mr. Harry Gourlay): The hon. Gentleman is very ingenious, but in discussing the Estimates he must not refer to questions of taxation.

Mr. Taylor: Mr. Deputy Speaker, I want to know why the number of applications has gone down. Surely I am entitled to ask the Minister about factual matters without in any way debating policy. Surely I am entitled to ask the Minister if this had any bearing on something which we are discussing in the Estimates. If we do not do so we are failing in our duty in the House of Commons.

Mr. Deputy Speaker: The hon. Gentleman may certainly make incidental references, but he must not discuss taxation at any length.

Mr. Taylor: I was not intending to, Mr. Deputy Speaker. I just mentioned the word. I am not trying to bring in another subject under the guise of this subject. That was not my intention in asking for this debate.

Mr. Deputy Speaker: The hon. Gentleman may continue, and I will pull him up if he goes out of order.

Mr. Taylor: I am grateful, Mr. Deputy Speaker. Over the last four years the total burden of tax on the road user has doubled, from £777 million to £1,585 million by way of petrol duty, purchase tax and vehicle licences. That is a trend, but this trend would not explain the sudden change in one year. There would have to be a sudden change in the trend of taxation within that one year to justify the drop. By looking at the figures for January, 1968, compared with January, 1969, we see the factor which has changed dramatically. Mr. Average taking a driving test in 1968, and thereafter becoming the average motorist in Britain, would find, looking forward to a period of one year, that the total burden he would have to accept would be about £86 10s.; that is for an average family car, travelling 8,000 miles in a year and getting 27 miles per gallon. In one year from January, 1968, he could anticipate


spending £53 Is. 9d. on petrol tax, £15 13s. 3d. on Purchase Tax and £17 10s. on licence duty.
Mr. Average, in January, 1969, finds that his total burden has jumped from £86 10s. to £106 4s.; petrol tax £63 16s. 9d., licence £25, Purchase Tax £17 7s. 3d. That is assuming depreciation over about 8 years. Perhaps this dramatic change in the course of the one year which we are considering is one fundamental reason why there has been such a dramatic drop in the number of applications for driving licences. I feel that this is a relevant factor.
If that was the case, surely it is a matter which the Government should investigate fully. When we have these Estimates before us and see this dramatic reduction in the number of applications for driving licences, surely the Government should look into the position very carefully and decide whether this was the reason.
In the past, we have regarded the motorist as a kind of dripping roast, and perhaps recent events have shown that it has ceased to drip when we consider the one kind of thermometer which can give us any guidance; that is, the number of applications for driving tests.
What other guidance is there? There is none in the short term. In those circumstances, the Government should look very seriously at whether the change which has taken place can be related to the fact that there has been a savage increase in the amount of tax imposed on the private motorist, which, as I say, has doubled in four years. I hope that the Minister will say that his Department is making exhaustive inquiries into the relationship between the reduction in the number of applications for driving licences and this savage and thorough increase in all forms of taxation applying to motorists. The only other reason that he may be able to find is that there has been a miscalculation.
Previous Ministers of Transport have made it clear that the Ministry has a team of brilliant economists looking at all the figures, estimates and plans and that, because of the extra talent, because of the machinery and the extra ability in the Ministry, more accurate estimates can now be made. However, bearing in mind

the Ministry's long-term plans, if we cannot place any reliance on its estimates, we shall be in a serious situation.
I think that there is a simple explanation, and it is the one that I have given. We have reached a situation of diminishing returns from the hard-pressed motorist who, having had a great deal to suffer already, now finds himself having to pay twice as much as four years ago. It must be remembered that we are not discussing a matter which affects a minority. We are discussing 50 per cent. of our population.
There may be other reasons which discourage Mr. Average from taking the driving test. One fact which influences him very much is the ability that he will have to use his car on Great Britain's roads. When I was looking into the reasons for this remarkable drop, I came across some other figures relating to roads in Great Britain. These are the roads on which Mr. Average will drive, having been successful in his driving test.
When we consider our road building programme, it is interesting to note that of every £5 that Mr. Average contributes in taxation to the so-called Road Fund only about £1 goes on road building In 1966, which is the last year for which figures are available, for the average person in Great Britain only about £7 8s. was spent on roads, compared with £15 in Germany, £10 in France—

Mr. Deputy Speaker: Order. The hon. Gentleman is now referring to matters of taxation. While I ruled that he could make incidental references, on this occasion he is making detailed references.

Mr. Taylor: Mr. Deputy Speaker, since I have left taxatoin entirely and will not mention it again—

Mr. Deputy Speaker: The hon. Gentleman is referring to taxation, since the money raised for roads is raised by taxation.

Mr. Taylor: My difficulty is that the money spent on the driving test is also raised on taxation.

Mr. Deputy Speaker: The hon. Gentleman must know that the fee for a driving test is one for which the Minister is responsible. It is not raised by taxation.

Mr. Taylor: But that is my point. The Report tells us that the amount brought


in from driving tests has not covered the cost of them, and it has had to be taken from general taxation. This is mentioned time and again in the Report of the Estimates Committee. The point is made that because the fee was £1 we were not able to raise the money to pay the 1,500 examiners in Britain and cover the costs of the scheme. To that extent surely the purpose of taxation might be used. Having said that, I will leave the subject. I do not intend to come back to the general question of taxation.
It is vital to discover why there is this reduction in the numbers taking driving tests, because of the lessons that we can draw from it. I have perhaps strayed a little and taxed your patience, Mr. Deputy Speaker, and for that I am sorry. Therefore, I come to what I might call reason No. 2: is it because of inadequate roads and to what extent can we put reliance on this aspect?
We can count on having only £35 per vehicle spent on roads in Britain. That compares with £44 in France, £54 in the United States, £55 in Australia, £67 in Belgium, £74 in Italy, £79 in Germany and £113 in Japan. Whether we look at it as per vehicle or as per head, Britain's road spending appears at the foot of both leagues when compared with our main competitors and all other countries. It might be said that we are a small country with a lot of people, so per head is not a relevant consideration, but surely per vehicle is.
These are facts of which the Minister is aware. He has been cutting road spending so often that he must know the facts about the situation. Therefore, I ask him whether he can tell us the extent to which increased tax is the reason and the extent to which poor roads and scandalously low spending on roads in relation to revenue is the reason for the reduction in the number of applications for driving tests.
Having mentioned road building at some length, I move on to what might be reason No. 3. I should like the Minister to give some indication of the extent to which he feels parking is responsible for this amazing and sudden reduction in the number of applications for driving tests. Recalling my own driving test, one of the most difficult

things to do was parking my car. Obviously in county areas there is no difficulty about parking cars because there is plenty of space. But in the towns there is grave difficulty in managing to park cars. I suggest that anyone thinking of taking a driving test might well be discouraged if he knew that when driving his car in towns he would find great difficulty in parking. I suggest there are indications that the seriously deteriorating position about parking cars is having an effect on the number of people coming forward to take the driving test. I want to know what the Ministry's experts feel about it and what the Minister, with his own detailed knowledge and experience, also feels.
In 1955 we had a change. Parking meters were brought in. Perhaps I might briefly mention the experience of Glasgow. In May, 1965, Glasgow introduced meters. Up till November, 1966, the yield was about £130,000 in charges and excess payments. In 1966–67 the expenditure in salaries etc. for operating the meters was £46,475 and the income was £52,000. So we have a scheme bringing in £52,000 in charges and excess payments, but we are spending £46,000 administering it.
Here we have a situation which, unfortunately, because the money has been used for other purposes, and because the Minister brought in a Bill to use the revenue derived from parking meters for the purposes of public transport, is getting worse. What I am asking the Minister to do is to look at these three propositions which I feel could explain this sudden reduction in the number of applications for driving tests, and to say whether these are the three reasons. First, is it taxation? Is it the fact that the burden on road users has doubled in four years, and perhaps most remarkably of all during the last 12 months?

Mr. Speaker: Order. Even if it is true, we are not, on these Estimates, discussing the burden of taxation. The hon. Member must keep to the subject.

Mr. Taylor: I shall not dwell on that any longer. There must be a reason for this decline, but we have been given no satisfactory and convincing reason why, in one year, there has been a sudden reduction of about 18 per cent. in the Estimates, and a reduction of about 14 percent,


in the number of applications for driving tests.
We want to know the reason for that. I am saying that one reason may be taxation, one reason may be the roads, and one reason may be the difficulty of parking. I want to know to what extent the Minister feels that one, or all, of those factors may have contributed to this reduction. In the explanations given to the Estimates Committee no convincing reason was given for this decline. Only long-term trends were mentioned.
Having put those questions to the Minister, which I know he will consider in his usual courteous way, may I ask whether he thinks this reduction will be permanent. If it is to be permanent, we must consider that part of the expenditure which provides the salaries of 1,500 examiners, and also provides continuity of employment for them. If this is to be a permanent feature, I think that we should consider having a different kind of test, and perhaps having better tests. I think that we can all remember taking part in a test which involved flapping one's hands, something which one never did after passing the test. If this decline is to be a permanent feature, will the Minister consider making better use of this money and of the services and experience of these excellent examiners.
Perhaps the Minister will consider something which I think we all agree would be in the interests of road safety. If someone has an accident, particularly if he is a teenager, or a young adult, he should be required to take another test. Will the Minister also consider the proposition that instead of having tests in the suburbs or in towns only, part of the test should ensure that people have some experience of driving on motorways, and of driving at night, which requires a different kind of driving?
I think that the present situation gives us the opportunity to ask the Minister why this has happened, how it has happened, and what reasons he thinks have been advanced logically for it. If this is to be a permanent feature of our way of life, can greater use be made of the valuable experience of the examiners so that better tests can be held in the interests of road safety?
We are considering Estimate for millions of £s. I am discussing the expenditure

of only £700,000. A shortfall of this amount is very small in relation to the total sum, but I think that the lessons we can learn from this reduction in the number of driving tests could set the pattern for our policy for a long time to come.
I hope that the Minister will try to answer my questions, because, as I have said, I believe that some important lessons can be learned from this shortfall, lessons which I hope the Minister of Transport in particular will remember today, in the future, and at all time when the future of the motoring public is being considered.
We are talking not about a minority of 10 or 20 per cent. but about half the families of Britain, who have cars and who feel, I am afraid, that there has been a vendetta against them and that they are being treated—

Mr. Speaker: Order. We are talking about the reduction in the number of citizens taking driving tests.

Mr. Taylor: I was going to say that the reason for the decreasing numbers may be that they have been adversely treated, not that they are looking forward to the future with more hope and confidence.

9.21 p.m.

Mr. Peter Mills: I congratulate my hon. Friend the Member gor Glasgow, Cathcart (Mr. Edward M. Taylor) on bringing up this matter in his usual clear and forthright way. This reduction in the numbers taking the driving test represents a serious loss of revenue, and it is vital to know the reason. My hon. Friend was right to say that a contributory factory is higher taxation and other things which mean that people feel that they cannot afford to drive a motorcar and so there is not much point in taking the test. We cannot dismiss this important factor—

Mr. Speaker: Order. We cannot dismiss it, but we cannot discuss it in this debate.

Mr. Mills: It is important that people should have these tests. They should be prepared for driving, and the standard of the tests should be much higher. I am concerned that the numbers have dropped by 18 per cent., which is a large figure,


and I should be interested to know whether the Minister thinks that the trend will continue.
In these days of financial crises, we should know what we shall do with the testers who may become redundant. Has the right hon. Gentleman any alternative plans for them? It is not much use paying them if they are not working to full capacity. As the numbers apply for tests go down, these men will not be doing a full day's work. Time after time the Government have said that we need more productivity; I should like these men to do other things, like vehicle-testing. Alternatively, we might require that everyone who had an accident should take a fresh test.
Another contributory factor—I may be out of order to mention it—is surely fear. People are afraid to take a test because they are afraid to drive on our roads. Unless one has a very high standard, driving on motorways is a frightening experience. This is one of the reasons for the serious loss of revenue. I hope that the Parliamentary Secretary will give us a clear answer to these questions so that we know where we are. Above all, I am concerned about what he will do with these inspectors who are not working to full capacity.

9.25 p.m.

Mr. George Younger: Can the Minister give figures to show the regional variation in the drop in the number of people taking driving tests? If the drop is greater in the congested areas where driving is more difficult, it will be a more serious matter than even my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) pointed out. If, however, the drop is more severe in the remote areas, perhaps the Minister can take action to make it easier for people in these places to take the test. I have found that in the more scattered areas it is difficult for people to arrange to be at testing centres at the appropriate times because of restricted public transport. In other words, is there a significant pattern shown by the figures not merely in Scotland but throughout Britain?
Has the drop in the number of people taking driving tests any relationship to the number of failures? It has been

represented to roe on several occasions in recent years that more people are failing the test. Could this be discouraging people from taking the test more frequently? If so, this could be an understandable explanation for the drop.

9.27 p.m.

Mr. Ian MacArthur: The House will be grateful to my hon. Friend the Member for Glasgow, Cathcart (Mr. Edward M. Taylor) for raising this important subject and for presenting figures which I can only describe as shocking. My hon. Friend the Member for Ayr (Mr. Younger) spoke of the possible regional variation and I hope that we shall be given information about that.
I hope that the drop in the number of applications for driving tests in Scotland is not as marked as it is south of the Border. There is, however, good reason why it should be, although driving conditions in Scotland are, by and large, more pleasant than they are in the South. I was informed by the Minister some time ago that there are fewer cars per mile on roads in Scotland.

Mr. Edward M. Taylor: There are better people, too.

Mr. MacArthur: These more pleasant driving conditions are a great tourist attraction.
One could advance many other arguments to explain this reduction. A number of factors have occurred in the last few years which could have deterred people from taking the driving test in Scotland. While driving is more pleasant in Scotland, certain factors have eroded that pleasantness. For example, Scotland more than the rest of Britain suffers from the impact of S.E.T.

Mr. Speaker: Order. The hon. Member knows that we cannot discuss in this debate the economy of Scotland and Selective Employment Tax. We are discussing a decline in the number of persons seeking a test.

Mr. MacArthur: I am obliged, Mr. Speaker. I hoped that it would be in order to touch on the tax. I believe that in Scotland over the last year some people coming for tests may have been deterred from doing so by the impact of British Standard Time on driving in the mornings.

Mr. Speaker: Order. The hon. Member can mention a number of factors, but he cannot discuss in detail any of them on this Vote.

Mr. MacArthur: May I pursue the point which has been raised by my hon. Friends? If this trend continues what is to happen to the examiners? I should like to know the number of examiners there are in Scotland and what plans there are for them if the trend continues.

Mr. Edward M. Taylor: There is the Land Commission.

Mr. Mac Arthur: Are they to be employed in the new heavy vehicle testing station? If unemployment is created among examiners, the number of unemployed persons, particularly in Scotland, will be much increased. The number of new jobs provided in Scotland has fallen and the number of people employed in Scotland has fallen sharply. Employment opportunities for redundant people are that much lower. Therefore, it is important when there appears to be a threat of unemployment for these hardworking, deserving members of the community that we should ask what study is being made of the impact on the examiners of the drop in the number of those coming for tests. Particularly in Scotland, what are the plans drawn up by the Minister and his colleagues in the Department of Employment and Productivity to provide alternative employment in the same sort of work for these examiners, who will lose their employment if the trend continues?

9.32 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Bob Brown): We have had an interesting debate. The question of taxation has been raised on more than one occasion, but I do not propose to tax your patience, Mr. Speaker, because this is a matter for my right hon. Friend the Chancellor of the Exchequer. Suffice it to say that I do not remember any Chancellor who was the darling of the motorist. I can hardly imagine a situation in which motoring organisations would issue with their annual reports car stickers saying, "We love Roy", or Harry or whatever the name may be.
Driving test applications have increased steadily through the years, although they

have not done so consistently. In 1960 the number of applications received was around 1·6 million. There was a dramatic increase in 1964, when for the first time applications topped the 2 million mark. Since then the number has been 2 million or just over that, until in 1968 we saw a significant fall in the number. This amounted to a drop of 4·5 per cent. on the 1967 figure. I concede that it was significant, but this is a matter in which it is very easy to be wise after the event. In practice, it is not easy to judge the elasticity of the demands for driving tests. That is highly unpredictable and a broad brush approach is inevitable.
Prior to the increase on 2nd July last year, from £1 to 35s., the driving test applications in 1968 were running at the rate of only about ·8 per cent. lower than in 1967. The slackening in demand arose in the six months after the increase in fee: there was a drop of 8·5 per cent. over this period. During the last eight weeks of 1968, the decrease was only 5·9 per cent. compared with the last eight weeks of 1967. The impact of the increased fee seems to have been wearing off by them.
We have been criticised for not foreseeing the effect on demand of the increase in fee. I freely admit that the immediate impact of the fee increase was greater than we expected, though, as I have already said, the effect seems to be wearing off. The fact that 54 per cent. of tests result in failure suggests that far too many people come for a test before they are ready for it. This is confirmed by the fact that so many people appear to have been so easily and quickly discouraged, by the increase in fee, from presenting themselves for test.
In an all-out effort to improve the standard of driving instruction and to reduce the number of people who fail the test, we have introduced the Register of Approved Driving Instructors. This was established in 1964, and since then registration has been purely voluntary. About 8,000 professional driving instructors have passed the qualifying examination which entitles them to registration. Inclusion in the Ministry Register signifies that an instructor is capable of a high standard of tuition. Furthermore, registered instructors are subject to periodic test checks of their continued ability to give driving instruction to the high standard that we desire. We have evidence that the pass


rate achieved by candidates trained by Ministry-approved driving instructors is significantly higher than the national average.
I want to explode the popular myth that examiners look for people to fail. This is completely false, because our examiners are as keen as the candidates themselves are to see that they pass the test if their driving is up to the required standard.
By any standards the test is still, at 35s., good value for money. The fee charged no more than covers the cost. By this I mean, not only the time the examiner spends with the candidate, but also the cost of training the examiner to the high standard to which I have already referred and supervising the conduct of tests to ensure that this standard is maintained at a uniform level at the 400 driving test centres throughout the country.
I make no apology for the fact that the fee is now 35s. This is what it costs to provide, and it is surely right that those who use this service should pay for it. Our officials are in close touch with their opposite numbers in European countries, and I remain convinced that the British driving test is second to none in its quality, the way it is conducted, and the degree of supervision it receives. I talked briefly about the driving test in the recent debate on accidents on the Ml. As I said on that occasion, the driving test is a carefully balanced and searching test of both driving skills and driving behaviour.
The hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor), after speaking about taxation, a subject to which I will not refer again, suggested that one of the reasons for the falling number of applications for tests was the scandalously small amount of money we are spending on roads. This comes ill from any hon. Member opposite, since in 1963–64, the last full year of Conservative administration, just over £150 million was spent on new construction and major improvement of roads. Last year, 1967–68, comparable expenditure was over £250 million, an average annual increase of 15 per cent.

Mr. Speaker: Order. We may not discuss the general road programme in

this debate. There is an item in the Supplementary Estimates of £625,000. grants for highways in Wales; but I see no other.

Mr. Brown: I bow to your Ruling, Mr. Speaker, and I shall not labour the point. By 1970–71, spending will top £350 million. Thus, in spite of the economic situation, it is clear that the Government are determined to tackle the results of the years of neglect of British roads which faced them when coming into office.
The hon. Members for Torrington (Mr. Peter Mills) and for Perth and East Perthshire (Mr. MacArthur) asked what driving examiners were doing now, the implication being that we have driving examiners sitting in test centres throughout the country doing nothing. Driving examiners are fairly versatile people. Their formal title is "Driving and traffic examiner". They are appointed both to conduct driving tests and to enforce the drivers' hours requirement applicable to drivers of goods vehicles under Section 73 of the Road Traffic Act, 1960.
This is a convenient arrangement because it means that we have a flexible force of men who can be kept within or drawn from driving test work as the need arises. It is a sensible arrangement which ensures the most economical use of driving examiners. There can be no question of surplus funds or manpower arising as a result of the decline in applications for tests. The size and, therefore, the cost of the organisation are geared in both the short and the long term to the demand for tests. As I said, the fee does no more than cover the cost of the organisation, taking one year with another.

Mr. MacArthur: The hon. Gentleman has just made a statement of great significance, if I understood him aright. I understood him to say that even if the trend continues employment among examiners will not be affected because they are qualified to be transferred to other duties, and the Government have no hesitation in so transferring them. That is a serious statement, particularly if those duties are to enforce requirements of the recent notorious Transport Act. It would represent a total change of occupation for these deserving and hardworking people. I hope that the hon. Gentleman will say more about that.

Mr. Brown: The hon. Gentleman could not have been listening. I said that the driving examiner's formal designation, which, therefore, governs the terms of his employment, is "Driving and traffic examiner". It includes more than simply undertaking the conduct of the driving test. There is no question of these people being bludgeoned into doing any job for which they are not trained and which they do not want to do. It is part of their job.

Mr. MacArthur: Is that what they are all doing now?

Mr. Brown: The hon. Gentleman is being very difficult. Of course, they are not all doing it. Driving examiners are conducting driving tests. If there is any slackness at a particular test centre, they go on to the enforcement work to which I have referred. This is nothing new. It is not something which has happened since the fee was increased. This inter-changeability has been going on for years.
The hon. Member for Ayr (Mr. Younger) spoke of regional variations. In Scotland, there are 130 examiners doing testing, and in England and Wales there are 1,070. In Scotland 153,000 tests were conducted in 1968, and in England and Wales there were 1,900,000. The total of tests per examiner in 1968 in Scotland was 1,176 and in England and Wales 1,765. There are 126 centres in Scotland and 339 in England and Wales. The figures should reassure the House that there is no severe regional variation in Scotland.

Mr. Younger: I am grateful for the figures but my point was whether the drop in the number of driving tests is worse or better in other regions than in the South-East.

Mr. Brown: The very fact that in proportion the figures are so close together indicates that there is no differential between the populated areas of Scotland compared with those of England and Wales.
The hon. Member for Cathcart referred to the availability of parking. Clearly, he thinks that we should be spending more money on parking schemes. We intend doing just that. There are proposals in the Transport Act on this, and if hon. Members opposite had not put

up so much pointless opposition to the Act we might have had its benefits much sooner. Under the new scheme of grants towards capital expenditure on public transport, grant of up to 50 per cent. will be available towards the cost of car parks at railway stations handling substantial volumes of commuter traffic. The hon. Member may also like to be aware, as he evidently is not at present, that the Government give substantial aid to expenditure by local authorities on parking schemes through the rate support grants.

Mr. Speaker: Order. The hon. Gentleman cannot pursue that subject in detail. There is no provision in the Supplementary Estimates for extra provision for car parks.

Mr. Edward M. Taylor: May we have an assurance that the hon. Gentleman will perhaps refer to the Supplementary Estimates that we are discussing and, in particular, explain where the figure of an 18 per cent. deduction comes from when the only reduction he has referred to is one varying between 0·6 and 5·9? While you are generous in the way you handle these debates, Mr. Speaker, perhaps the hon. Gentleman will now refer to the Supplementary Estimates.

Mr. Speaker: Order. It is not for the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) to call the Joint Parliamentary Secretary to order.

Mr. Brown: I have answered the question about percentages. Clearly, while there may be a reference to 18 per cent. in the Estimates, I have referred to percentages at different periods.
The hon. Member for Cathcart suggested that we should have a better system of testing. I take it that in referring to younger drivers he meant people aged 25 or younger. He suggested that if they were involved in accidents they should perhaps be retested. However, if we were to take such a course, I could not accept that it should apply only to young drivers. Why not to more experienced drivers? In any case, I hope that the hon. Member meant people who were blameworthy in accidents, because there are often blameless parties to accidents. The courts already have power, under Section 5(7) of the Road Traffic


Act, 1962, to disqualify from driving until such time as he passes a driving test a person convicted of certain driving offences such as careless or dangerous driving.
The hon. Gentleman suggested that we should have a better test, embodying night and motorway driving. This is debatable. Night driving tests are not feasible during the short hours of darkness in the summer. Tests at night when there is little traffic about would, in any event, prove little or nothing. It should be fairly obvious that a driver's competence cannot be shown by a night driving test.
A high-speed driving test on motorways is impossible in London and the other large cities and towns where the majority of driving tests are conducted. It has been tried in Switzerland, where it was found that such extended tests in no way changed the result of the first tests on ordinary highways. In Rotterdam part of the test routes necessarily include a stretch of motorway, but we understand that the examiners find out nothing about the driver as a result of his drive along a motorway.
It is often said that the test should include a test of the candidate's ability to control a skidding vehicle. Apart from the practical difficulties of finding 400 new places to do this, we feel that it is entirely the wrong approach. I am sure that hon. Members would not wish driving examiners to conduct this sort of test on the public highway. The important thing is that drivers should learn to drive in such a way as to avoid skidding.
We must accept that in the latter part of 1968 the applications for driving tests turned out to be lower than those for similar periods in other years. We must also admit that the extent by which applications fell off was quite significant, at any rate in the weeks immediately following the change in fee. I ask the House to accept and understand the difficulty of making forecasts in this field. Consumer resistance cannot always be accurately forecast, even by long-experienced market researchers in the employment of big concerns.

BANABAN COMMUNITY (GRANT IN AID)

9.54 p.m.

Mr. Edwin Brooks: On page 12 of the Supplementary Estimates we find under subhead C.17 of the Commonwealth Services Vote an item which reads:
Banaban Community (Grant in Aid) (Revote) £80,000.
This sum is listed as "Revised provision". It is in fact a net increase of that amount. It is further described as an agreement by Her Majesty's Government to provide a grant to the Banaban Community on Rabi Island.
My interest in this small and apparently insignificant item was initially aroused when I noticed that a footnote was appended at the bottom of page 13 which said:
Expenditure will not be accounted for in detail to the Comptroller and Auditor General. Any unexpended balances of the sums issued will not be liable to surrender to the Consolidated Fund.
This is a fairly unusual, though by no means unique, provision. It is perhaps worth noting that under the same heading of "Special Payments" we find that the £250,000 allocated as emergency aid to Nigeria is apparently to be subjected to the Comptroller and Auditor General's detailed scrutiny.
As an assiduous member of the Public Accounts Committee, I deprecate such intended absence of public accountability for any reason, and I felt it worth pursuing this obscure item to find the reasons for this apparent anomaly.
It was first necessary to find out the whereabouts of the Banaban Community, which until then had escaped my attention. It proved to be a long search. Reference to the Encyclopaedia Britannica proved useless, as neither the Banabans nor their island were mentioned.
The Times Atlas Gazetteer also drew a blank, with the only Rabi listed being apparently in Czechoslovakia. Fortunately, at that stage, I had yet to learn that the Chairman of the Rabi Island Council is Mr. Tito. Eventually the Columbia Lippincott Gazetteer came to my rescue, although it seemed that to find "Rabi" I had to look up "Rambi". This I did, and read;


"Rambi, Rambe or Rabi", which was described as a volcanic island of some 1,048 souls in the Pacific Ocean. Fortified by this narrowing of my search and by the elucidation of the spelling, I returned to The Times Gazetteer, where, sure enough, Rambi was listed.
However, surprise, surprise, no latitude or longitude was given, which is not only curious, but frankly impossible. At this stage, I realised that serious research was called for, and it was during this phase of my labours that the oddities accumulated to such an extent that I felt persuaded to raise this matter in the House tonight.

Mr. William Molloy: I find it fascinating to listen to my hon. Friend's researches, which he entered into in his endeavour to bring this matter to light. May I recommend that he might have short-circuited all this by going to the Royal Geographical Society?

Mr. Brooks: As a former professional geographer before entering this House I can only plead lamentable and profound ignorance, for which I have no excuse. Before developing my main queries about this item, may I make the simple point which is brought out by this narrative of amateur bewilderment and inefficiency? It is that we in the House of Commons, inevitably preoccupied with the affairs of constituency and State, are naturally ignorant of the conditions—and even the whereabouts—of that remote scatter of islands and archipelagoes and coral atolls which are left us by a half-forgotten Imperial legacy.
The British Empire has evolved, remarkably painlessly, on the whole, towards an independent Commonwealth of Nations, in which independence has been bestowed upon peoples who have become politically and economically viable. At least that is the philosophy and the doctrine, and we British have cast ourselves in the rôle of a mother who is happy to see her children let go of her apron strings. But there are some children who can never grow up in that sense; in terms of populations, resources and economic potential, they are simply not viable as adult independent nations. They are what might be called "impossible countries", and even if, as has happened notably in Africa, such States do

appear on the map of post-colonial geography, their future is as secure—and certainly no more secure—than that of the child orphan cast alone into the wicked world.
Among such impossible States are the tiny scattered island communities of the Pacific Ocean. And this brings me to the story of the Banabans and their migration a thousand miles from Ocean Island to their present home on Rabi, in the Fiji group. There was on 7th June, 1967, an Adjournment debate introduced by the hon. Member for Rye (Mr. Bryant Godman Irvine) which coincided with a visit being paid to this country by representatives of the Banaban Community. This enables me to avoid a great deal of tedious detail about the circumstances of these curious people. Some short summary is nevertheless necessary.
The Banabans, it seems, are a people of distinct culture who once lived on this island, itself 250 miles distant to the west from its main neighbours in the Gilbert and Ellice group. This island came under British rule in 1901 in circumstances over which perhaps we should draw a veil. I understand that the Banabans were paid £50 for the island. From then on throughout the whole of this century it has been a major producer of phosphates, mainly for the Australasian markets. Naturally such mining strips the soil and impoverishes the environment generally and it has been estimated, by the Banabans at any rate, that it would cost about £A36,570 to rehabilitate each acre of Ocean Island. This estimate is based upon certain calculations made in comparable conditions on the Nauru group. On such figures per acre, the total cost of restoring Ocean Island, the original home of the Banabans, following the exhaustion of its phosphates, would come to approximately £A40 million.
However, the Banabans left Ocean Island before the Japanese onslaught across the Western Pacific, and after the war the Island of Rabi, a small island, although with some economic potential, was purchased for the low sum of £25,000 as a home where the Banaban Community, it was hoped, would be able to settle permanently. Although remote from their original homeland, Rabi is an island of some agricultural wealth, and it is well provided, in particular, with


coconut palms. Following an experimental period of two years on Rabi, the Banabans decided by a large majority, and by secret ballot, to remain there. However, they have not surrendered claim to Ocean Island, and within the last two years they have been demanding independence for that island.
Presumably they envisage an independent State within the Commonwealth of two small islands 1,000 miles apart, one of which would be virtually uninhabitable following the conclusion of the phosphate mine, and with a total population of between 1,000 and 2,000—in effect, a large, or not so large, village. This is clearly the concept of national sovereignty gone made. It is easy to deride such rather grandiose projects. Nevertheless, it poses the problem which I have touched upon of the political future of such tiny dependent territories. This is where the grant of £80,000 to some extent involves policy decisions about this future political status.
The Banabans have been quick in recent years to point to the example—and there are some parallels—of Nauru, which is also a major supplier of phosphates, where the estimated income for the islanders during the next 30 years from such mining has been put at £144 million. Therefore, we are talking about a very great deal of money. But the position on Ocean Island is much less entrancing. In the first place, the revenue from the phosphate industry is an essential ingredient in the budget of the Gilbert and Ellice Islands, within which Ocean Island has been administratively incorporated. This colony is economically weak and fragile, despite recent moves towards a more democratically elected governing structure. Therefore, any loss of income from Ocean Island—for example, as a result of new arrangements with the Banabans involving their independence or some new contractual arrangement over the distribution of royalties from the phosphate mining—would quite severely hit the Gilbert and Ellice Islands Colony unless Britain were to step in and make grants or loans available to that colony.
In passing, I might mention that in the Adjournment debate of 7th June, 1967, to which I earlier referred, there

was a sympathetic and sensitive elaboration of the Banaban case. I do not wish to use this debate, even if I were permitted to do so, to attempt to argue the alternative point of view put forward by the Gilbert and Ellice islanders; but they have their own point of view on this. It has been expressed as recently as last autumn in London, and they would be very apprehensive if the financial problems of the Banabans were to appear to be solved as a result of taking away some of the revenue from Ocean Island, upon which they too depend.
The second element in the difficulties facing Ocean Island is that the phosphate deposits are running out fast, particularly as it has recently been decided to increase the annual rate of extraction from 450,000 tons to 600,000 tons. As a result of this decision, which was reached by the British Phosphate Commission on grounds of efficiency and profitability of production, the deposits will be exhausted in 1977 instead of in 1981 were the lower annual rate to be maintained.
The Banabans have for many years benefited, not nearly as much as they might feel is their entitlement, from royalty payments derived from the extraction of phosphates from their original homeland. They are naturally concerned that this traditional source of revenue will have dried up in as little as eight or nine years' time. They are also critical, I think with some justification viewing this historically, of the benefits which they have derived over the years from this mining activity. They have made strenuous efforts to gain a larger share, partly to help them to develop Rabi during the next critical 10 years before the phosphate deposits run out, and partly to help them to rehabilitate the ravaged landscape of Ocean Island.
Whether any such increase as has been talked about in royalty payments would come remotely near meeting the bill for the rehabilitation of Ocean Island, that is to say £A40 million, is open to serious doubt. I ask my hon. Friend what the British Government plan to do with Ocean Island, which is still in the ownership of the Banabans, once the phosphates are exhausted. Is it to be left as a Pacific junk yard or, as the Banabans themselves once put it, as a land of "coral pinnacles"? This is a critical matter in


evaluating the significance of the grant which is now being suggested as adequate compensation to the Banabans for the income which they claim they should have been receiving over the years from Ocean Island phosphates.
Whether Ocean Island is destined to become part of the Banaban Republic or part of the Gilbert and Ellice Islands Republic, which might be almost equally non-viable, or whatever may be the eventual solution, it is clear that the ending of mining is bound to pose severe difficulties for the local administration. Perhaps my hon. Friend will indicate, if the information is available, the detailed reasoning which lay behind the decision to increase the extraction rate. On the face of it, it seems likely, whatever may be the merits of doing so, to precipitate changes which there might be some point in postponing. There may be a case for spreading out this work in order to delay the problems which will arise for the Banabans and for the Gilbert and Ellice islanders in 1977.
This brings me directly to the £80,000 we are now making available to the Banaban Community. The money was originally made available last year, indeed in 1967 in the first place, and it was also at that time made available in a Supplementary Estimate.
It was, however, subsequently rejected by the Banabans as being inadequate and unsatisfactory. In an effort to reconcile the various viewpoints, including those of the Gilbert and Ellice islanders, the so-called Ocean Island phosphates discussions took place at Lancaster House at the close of October, 1968. Since the report of the discussions has been published with the various viewpoints clearly set out, I have no wish to read the detailed financial case presented by both the Banabans and the Gilbert and Ellice Islands representatives. I would simply ask my hon. Friend to explain the financial reason behind this ex gratia payment. In other words, what were the criteria involved in assessing the sum? Was it to be regarded as a once-for-all payment, a sort of settlement for the ravages of the imperialists of long ago? I ask that because, in the Daily Telegraph of 20th June, 1967, a report of the original offer reads:

Britain has agreed to make them (the Banabans) an ex gratia payment of £80,000, with the promise to review their share next spring.
That would have been the spring of 1968.
It appears that, at that time, in the summer of 1967, the then Minister of State for Commonwealth Affairs was arguing clearly that it was to be a once-for-all payment. She said:
It is in respect of this that we are making a once-for-all grant of £80,000 to be used under controlled conditions for the economic development of Rabi Island, where at the moment the Banaban community is living."—[OFFICIAL REPORT, 7th June, 1967; Vol. 747, c. 1252.]
Does the same position hold with this renewed offer under this year's Supplementary Estimate? In other words, is the Banaban share of royalty payments subject to review at some subsequent date?
In paragraph 6(b) of the Agreed Minute, which was orginally signed at Wellington on 15th September, 1967, such flexibility seems to be implied and also to be at the discretion of the British Government. But in paragraph 7(h) of the Concluding Statement made by the right hon. the Lord Shepherd on 30th October last, it would seem to be unlikely that any changes would be permitted which would be to the disadvantage of the Gilbert and Ellice Islands Colony. However, since there is the proviso "for the time being" in that paragraph, it might be helpful to know precisely what further financial concessions are contemplated for the Banabans.
My next question concerns the disposal of the £80,000, assuming that it is accepted this time by the Banabans. It would be interesting to know if they have indicated their willingness to do so. Although it is a small sum in these days of Concorde, £80,000 is still a tidy sum in terms, say, of Britain's annual contribution to the invaluable work of the International Planned Parenthood Federation. Furthermore, it will go to people who number at most 2,000, including children, and I think that we should see it as roughly equivalent to at least £150 per family in a part of the world where per capita incomes are not notably high. According to the figures supplied last October by the Government of the Gilbert and Ellice Islands


Colony, the Banabans are already in receipt of an annual unearned income of at least 315,000 dollars, so that they are by no means the poorest of the world's under-developed peoples.
I do not want to sound parsimonious, but I think that Parliament should have some idea of what is happening to its money, particularly when detailed auditing appears to have been abandoned. This is a matter of accounting principles and, in view of the oddities of the whole story, it is a principle which we should not ignore. I feel that there is a matter here of wider concern, and it is very much implicit in this grant and the reasoning which seems to lie behind it.
The real dilemma of the Banabans, and of the Gilbert and Ellice Islanders, too, is that they are incapable of achieving political and economic stability and growth if left to themselves. We can shrug off the problem conveniently by pretending that it does not exist or assuming that the number of people involved is so small that we can jog along with the occasional hand-out or bribe to them to be of good behaviour.
But we may be wholly underestimating the future importance of many of these apparently insignificant and remote atolls. The Pacific today is the great arena of confrontation between a resurgent China and a rich but fearful United States. It is a big protective moat, but the lesson of the Second World War was that it could be hopped over. Today China is developing nuclear weapons, and probably intermediate range ballistic missiles. Before long she may well be testing them in the Pacific in the vicinity of these islands that we are discussing, just as the other great Powers, including the U.S.S.R., have been doing in recent years.
It would be foolish to sound too alarmist or to develop the argument at great length, but the prospect of a myriad tiny island states, most of which would be only too vulnerable to political corruption—not to mention Mafia-type activities—is not a pleasing one in these days of strategic reappraisal symbolised in the Sentinel ABM system.
Is Britain to stay indefinitely policing these States and giving them from time to time ex gratia payments, or are we to pull out completely—and, if so, when—

from the vast area east of Borneo? Is Australasia or the United States to take over our protective rôle? If not, is it to be the Soviet Union or China? Or should we reappraise the potential rôle of the United Nation
This leads me to consider not so much the speculative problems of military technology in terms of island bases—and there have been reports, although I discount the notion, that the islands may be envisaged as one such island base—but the inevitable growth in the economic importance of the ocean, the sea bed and marine technology in the next few decades. It is true that many of these Pacific islands lack the extensive areas of continental shelf which might one day offer rich yields of minerals and fuels, but they may well offer suitable sites for the new marine farming which is coming as certainly as the world's population is going to mount.
Such islands, small in themselves—Ocean Island is only three miles across—have territorial waters whose significance in future may well be great. They are, I think, likely to become increasingly important for meteorological and marine science stations and for the jumbo jets which will need servicing and refuelling facilities as they cross the Pacific. The supersonics are also likely to follow, for sonic boom reasons, the great ocean routes. Not least, they will become increasingly important as the advent of mass flying brings them into the holiday orbit of affluent Westerners and Japanese as areas where we can all follow Gauguin to the sun and to other delectable objectives.
What I am trying to suggest—and clearly I must not develop these wider themes tonight—is that we need to take a long hard look at the whole future of these dependent territories. I have for some time been urging the Government to define the powers of the Constitutional Commission so that it can consider the future links between the United Kingdom and these small and remote dependencies—

Mr. Speaker: Order. The hon. Member must resist the temptation to go too wide.

Mr. Brooks: I fully accept your point, Mr. Speaker. I will certainly not pursue this particular matter. But it is clear


that if we do not, when maters such as this arise where sums of money are allocated as part of an apparent philosophy of dealing with these small islands as client States, raise these more general issues of their political future, perhaps no opportunity will be presented to the House. As I have tried to argue, policy questions of some magnitude are involved in what appear, on the face of it, to be very small and harmless decisions.

10.19 p.m.

Mr. Frank Hooley: I should like to make a brief comment, but, first, I apologise to my hon. Friend for not being present during the first few minutes of his remarks.
I do not want to go into detail because of the late hour and because my hon. Friend is extremely well briefed and has covered all the essential points. My interest arises from a special report from the Methodist Church which is deeply concerned about these people and has made social representations on their behalf. I understand that it is also committed to raise, from the World Methodist Church, a sum of at least £10,000 to help them. My interest in and knowledge of the case derive entirely from that source.
I am also concerned about this problem for the reasons set out in the latter part of my hon. Friend's remarks. I believe that there is a serious general problem about what this country should do in relation to what has been called the micro-States, that is to say this scattering of about 30 dependencies, the residual amount of the erstwhile Colonial Empire, consisting largely of tiny territories, with tiny populations, which, to be realistic, cannot be looked on as potential independent States with viable political or economic futures.
The details of the matter have been gone into with great care by my hon. Friend. I am not sure whether he has quoted any figures for the value of the phosphates, but I obtained some information from my hon. Friend on the Front Bench, and it is rather startling to look at the disparity between the value of the phosphates themselves and the moneys accruing to these people whose land and property this was until they were removed from it, and I believe that theoretically it still is their property.
Ten years ago the value of the phosphates was about £1 million. The revenue accruing to the Gilbert and Ellice Islands Administration then was £250,000, while the Banabans got £29,000. In 1967–68, ten years later, the value of the phosphates was £2½ million. The Gilbert and Ellice Islands got nearly £1 million of that, while the Banabans received £162,000. These figures are in Australian £s.
It seems to me that the relationship of the proportions of those sums shows that the Banabans have a substantial case for further consideration and for more financial aid from this country than they are getting at the moment. As these phosphates are by any reasonable standard the property of the people, and while, obviously, the technical expertise which makes them exploitable has to be paid for, nevertheless it seems that the money accruing to the Banabans from the total revenue raised is somewhat tiny in relation to the value of this natural resource.
I underline what my hon. Friend said about the rate of exploitation, which is of serious concern to these people. I confirm the figures given by my hon. Friend of the build up from 450,000 tons to 600,000 tons which has occurred recently, and which is estimated to shorten the life of the industry to about eight years.
One of my major concerns is that we should be aware that the treatment, of peoples in our few remaining colonial dependencies has a direct effect on the general prestige and standing of this country in the world at large, and at the United Nations in particular. We may rightly be proud of the fact that the former Colonial Empire has developed into the Commonwealth, but many members of the United Nations—about 70 or 80 of them—are still extremely sensitive on the subject of colonialism generally, and colonial possessions in particular.
So long as we leave unredressed what may be regarded as legitimate grievances, and so long as we even appear to exploit small peoples who are unable adequately to defend themselves, so long shall we be subject to continual criticism and attack at the United Nations, and from bodies such as the Committee of 24 Some of the criticisms and attacks may be ill informed, unnecessarily vicious and politically stupid, but they will go on until


we get down to the serious question of solving these people's problems.
I am not wholly satisfied that the Government have worked out a general forward policy for dealing with this kind of territory. We can probably work out a sensible forward policy only by deliberately offering to co-operate with the international community through the United Nations and perhaps by making use of a part of its machinery, the Trusteeship Council, which may lately have appeared

to have exhausted its useful life but which could be given a valuable new lease of life by a calculated act of policy by the Government in saying, "We have these territories which are a residual responsibility and pose certain international and other problems, and we should explicitly like the co-operation and help of the international community in devising for them a viable and a sensible future acceptable to the peoples themselves and to the world." This is essentially my plea, and I am glad to support what my hon. Friend has said.

10.27 p.m.

Mr. John Peel: I had not planned to intervene, but I am probably one of the few hon. Members who knows this colony, and Ocean Island, among the many islands which make up the colony of the Gilbert and Ellice Islands fairly well.
I wanted to make sure that the Under-Secretary would cover one or two points which are particularly applicable. For instance, my memory, which is getting rather old on this matter, is that, when it was realised that Ocean Island would cost a great deal of money to rehabilitate after the phosphates had been dug out, we arranged to provide for the Banabans a much more luxurious island in the South Pacific, in the Fiji group, which could be developed to make a good agricultural community. Certainly, during the years that I was there, there were no serious complaints from the Banabans on that score, so I am rather interested that, many years later, these claims should be coming forward.
The problems of a colony of that size are very difficult, but people do not appreciate the enormous distances involved and the very small size of these islands. In fact, over the years, their peoples have themselves asked us, the administering Power, to help them to go to other islands where there is more room. There has been considerable overcrowding on many islands in the area and we instituted a large resettlement programme at the request of these people, and moved them to these other islands. In some cases, this resettlement was successful, but in others not so successful. In all these cases, although the islands may be overcrowded, certainly older people very much dislike being moved.
It is, therefore, nothing new to these people to move to other islands. My recollection of the removal of the Banabans to the South Pacific is that it was a good move in that the island provided for them, Rabi, was a good and fertile place. I hope that the Minister will explain more fully what is the present position.
As for the rumour that Ocean Island might be used as a harbour by potential enemies, my recollection is that it is one

of the worst anchorages one could find, so that the danger which has been rumoured is unlikely to arise.

10.31 p.m.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. William Whitlock): My hon. Friend the Member for Bebington (Mr. Brooks) began with what one might call a cold financial interest in the matter under discussion; but, being warm hearted, he was quickly carried away by an intriguing story which he was able to unravel about the Banabans.
I wish, first, to comment on the question of accountability which he raised. He was puzzled by the footnote on page 13 of the Supplementary Estimates. It is customary for grants of this nature to be governed in this manner. They are not subject to audit by the Comptroller and Auditor General here. Nor is it the custom for the balances to be subject to surrender. Adequate arrangements are made locally for audit.
The grant is being paid into a fund which is being set up in Fiji for the specific purpose of directing the money towards the proper objectives. It is intended that the money will be under the control of the Governor and that expenditure will be subject to proper audit in the Colony. In view of the circumstances in which the grant is being made, it would be inappropriate for the expenditure to be accounted for in detail here, in London, to the Comptroller and Auditor General. Since the Government have undertaken to provide the round sum of £80,000, it would not be appropriate to surrender any unexpended balance at the end of the financial year.
As my hon. Friend has found, the Banabans are a little-known but very attractive people who have been championed by hon. Members on a number of occasions. They were originally inhabitants of Ocean Island, where phosphate mining began in 1900. From an early date the Administration had been concerned about the future livelihood of the Banabans after mining had removed the top soil. They therefore had the idea of finding a new island for the Banabans and an opportunity occurred during the last war to buy the Island of Rabi, the Fijian spelling of which is, I gather, Rambi. An opportunity to buy this


island, which is in the Fiji group, occurred at that time at the low price of £A25,000. The purchase was negotiated by the High Commissioner for the Western Pacific with Banaban funds which he held in trust.
When the Banabans—who, during the Japanese occupation, had been sent to other islands and were used almost as slaves—gathered together again on the Island of Tarawa, they agreed to go to Rabi for a trial period of two years. At the end of that they agreed, by a large majority recorded in a secret ballot, to remain in Rabi. I gather that Ocean Island had become almost a moonscape, an ugly, inhospitable, almost uninhabitable island of coral peaks and rocks and holes left by mining excavations, whereas Rabi was not an atoll but an attractive island capable of considerable development. Quite voluntarily, and by the decision of an overwhelming majority, they decided to stay on Rabi.
The relationship between Her Majesty's Government and the Gilbert and Ellice Islands Colony and that between Her Majesty's Government and the Banabans is different in kind. Her Majesty's Government have a direct constitutional link with the Gilbert and Ellice Islands Colony of which Ocean Island is a part, and have responsibility for the good order and efficient conduct of the administration. The Banabans, on the other hand, are a community living in Fiji, but with certain rights as inhabitants of Ocean Island in the Gilbert and Ellice Islands Colony. This community has the same right of approach to the British Government as other inhabitants of the dependent territories.
My hon. Friend asked whether it is possible that Ocean Island can become independent. I draw his attention to a document which I am sure he has read, and which was placed in the Library after the discussions here in October, 1968, on the Ocean Island phosphates. During those discussions my right hon. Friend the Minister of State for Foreign and Commonwealth Affairs said:
In this context, I must remind you of a cardinal principle to which Britain has adhered closely in the past in dealing with her dependent territories, and to which we continue to adhere—that the wishes of the people of the territory must be the main guide to action.

There are cases where adherence to this principle has led to difficulties for Britain. But the fact remains that we must be guided by the wishes of the people as a whole within the existing boundaries of the territories.
In this case those members of the Gilbert and Ellice Islands Colony Delegation who are elected members of the House of Representatives (including the Chief Elected Member of the Governing Council), and thus representing the people of the Gilbert and Ellice Islands Colony, have made it absolutely clear that they would not agree to the exclusion of Ocean Island from their territory either now, or at any time when the Gilbert and Ellice Islands Colony may reach some status other than its present relationship with Britain.
On these grounds, I have to state that it is not possible for Her Majesty's Government to consider the exclusion of Ocean Island from the Gilbert and Ellice Islands Colony through the grant of independence on Ocean Island to the Banaban community.
It is entirely out of the question to consider Rabi as being excluded from the Fiji group. The Fijians would not consider any severance of the island from Fiji. There would certainly be repercussions from Fiji politicians if we were in any way to suggest that that is possible. There seems no question of an agreement that Rabi should be separated from Fiji and Ocean Island or the Gilbert and Ellice Islands Colony and made into one State.
My hon. Friend spoke about the small islands over whose future there is a questionmark, small islands whose future economic potential is very much in question and whose economic potential may have an importance out of all proportion to their size. As he said, they may have a strategic importance militarily which they do not have now. They may be in demand as sites for space tracking stations, meteorological stations, and so on. He spotlighted the danger that undesirable elements may wish to develop the islands in a way of which none of us would approve. Mafia-type organisations are operating in other parts of the world, but I know of no such instance in the Pacific. All these matters are matters of conjecture. They are matters on which I assure my hon. Friend that the Government will keep a close eye.
These islands may become very important because of the development of the resources of the seabed. We are on the verge of space travel, although we have not yet learned to live sensibly and


at peace on our own planet or to develop the resources it offers. Among the resources which we have not yet learned to develop are those of the seabed.
The importance of the resources of the seabed was spotlighted by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs in a debate on 31st October last. On 26th July last there was a full-scale debate on the question of the ocean bed, when it was pointed out that at the United Nations the United Kingdom delegation, along with Malta, sponsored the idea of setting up a committee to study the peaceful use of the seabed for all nations. We have gone to considerable lengths to consult on seabed matters all dependent territories with coastlines, and we pay due respect to their views.
As to the future of the remaining British dependent territories, the British Government stand ready to give independence to dependent territories which want it and which can sustain it. For the others, Britain is willing to work out arrangements appropriate to each territory which will enable it if it wishes to continue in some form of association with Britain. My right hon. Friend the former Secretary of State for Commonwealth Affairs, in his opening address to the Bahamas Constitutional Conference in London in September, 1968, outlined the policy of the British Government towards the dependent territories as follows:
There still remain a number of British territories around the globe. We do not know what their ultimate constitutional future will be. We have not and never have had any detailed blueprint. A few of these territories may wish to proceed to independence. Others may not. It is always difficult to forecast, but whatever the future holds we in Britain will adhere closely to the cardinal principle to which we have adhered in the past, that the wishes of the people concerned must be the main guide to action. It is not and never has been our desire or intention either to delay independence for those dependencies who want it or to force it upon those who do not.
Now that most of the territories for which independence is the goal have attained it or are close to it, our task is for the most part to work out arrangements for small island territories whose leaders most definitely recognise that they cannot hope to sustain separate sovereign independence and who in

many cases wish to retain some form of continuing link with Britain. The problems with which we shall be dealing in future are to some extent different in character from those with which we have been concerned in recent years. Some of the features of the arrangements already adopted in the associated states may be applicable to other British territories. In each instance our policy will remain, as it has always been, to work out arrangements for them in consultation with the representatives of their people which will meet the special circumstances of each individual case.
In this task our minds are not closed to new ideas. We have noted the concern expressed in the United Nations Secretary General's reports for the last two years about the proliferation of independent micro states, and his recommendation that their special problems should be examined. We are glad that there is a growing realisation that independence may not be the solution for very small territories. We have indicated our support for a United Nations study of smaller territories which is due to begin soon.
My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) has mentioned the Committee of 24 and we are well aware of the interest of the international community in decolonisation. Although we may think that some of the discussions of the United Nations have been somewhat unrealistic, we have participated in those discussions and we welcome constructive suggestions from any quarter. At the same time, we have made it clear that responsibility for our territories is ours alone while they remain dependent on us and we cannot shirk that responsibility. With that proviso, we are willing to consider constructive suggestions put forward in the United Nations including that for a special study of the problems of smaller territories.
The reason for making the special grant of £80,000 to the Banabans was stated by my noble and right hon. Friend, Lord Shepherd, in his concluding statement at the Ocean Islands phosphates discussion held in London in October last year. This was printed in a print containing the representations of the Banabans and the Government of the Gilbert and Ellice Islands Colony on the


subject of the division of the benefits from the Ocean Island phosphates, a copy of which was placed in the Library of the House at the time. Her Majesty's Government acknowledge a responsibility for assisting the Banabans to develop the Island of Rabi to its fullest potential as the best means of securing the future welfare of the Banaban community.
The Banabans have made claims as to their rights on the Ocean Island phosphates which the British Government cannot accept, for reasons made clear by my right hon. and noble Friend in his statement to which I have referred. I think the following passage from his statement clearly sets out Her Majesty's Government's position:
I would hope that both the Banabans and the people of the Gilbert and Ellice Islands Colony will accept that in coming to this decision the British Government has balanced the conflicting interests which inevitably arise with objectivity and fairness. The facts of the situation, when it comes to matters of hard financial decisions, must dictate the Government's policy.
The Government has considered from every aspect the Banabans' case for a greater financial income from the phosphates and has taken very seriously the Banabans' declarations of trust in the Government's good faith in deciding this issue. One of the factors which has decided the matter is the Government's sincere belief, based on all the evidence available, that the economic future for the Banabans in Fiji is a good one.
The British Government has on a previous occasion acknowledged a responsibility for assisting the Banabans to develop Rabi to its fullest potential and we still believe that this is the best means of securing the future welfare of the Banaban community.
The British Government therefore believes that everything possible should be done to press forward with a practical approach to the development of Rabi Island. A sound ground plan has already been prepared by experts who went to the island last year under technical assistance arrangements, and I firmly believe that if this can be followed up with the proper energy over a period of time, the future prosperity of the Banabans on Rabi Island can be fully assured.
For these reasons, Her Majesty's Government is prepared to renew the offer of a grant of £80,000 which was made last year, conditionally only on its controlled application to the development of the Rabi Island. Her

Majesty's Government have always taken the view that because of the mining of Ocean Island they ought to do their best to help the Banabans to settle on the island of their choice and develop it to its fullest possible potential.
Those were my right hon. and hon. Friend's words at the end of the conference to which I have referred.
My right hon. Friend the Minister of Overseas Development arranged in 1967 for a two-man team to visit Rabi under Technical Assistance arrangements to consider the best means of future development of the island, and a copy of their report also has been placed in the Library. I am sure that my hon. Friend the Member for Bebington has looked at it.
As has been reported to the House previously, the Banabans declined to accept the grant of £80,000 when it was offered to them after their representations made in 1967, but I am glad to say that their representatives have been discussing development projects for the expenditure of the grant of £80,000, made at the October 1968 discussions, with officials of the Fiji Government. I hope that practical steps will soon be taken in the development of the island. My right hon. Friend the Minister of Overseas Development has undertaken to consider any further technical assistance which may be required.
I am satisfied that the Banabans on Rabi will be able to provide for a prosperous future for the community. The Banabans in Fiji are lucky to be residing in a territory which, by Pacific standards, enjoys modest prosperity and has a stable social background, as the hon. Member for Leicester, South-East (Mr. Peel) said. It is true that the phosphate revenue will eventually cease, but even then, provided that the Banabans cooperate in developing Rabi to its optimum extent, they will still have a valuable asset to cushion them against the problems of the future.

Question put and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

Committee Tomorrow.

CONSUMER COUNCIL MACHINERY

Motion made, and Question proposed, That this House do now adjourn.—[Dr. Miller.]

10.53 p.m.

Mr. William Molloy: In taking this opportunity to emphasise the need to increase public awareness of the Consumer Council's machinery, I realise that the subject covers a number of industries and services, but I shall confine myself principally to the power industries, that is, coal, gas and electricity, adding a word or two about transport.
It is 20 years since we established the consumer consultative machinery for these four major industries, and in this respect, in relation to the principle of public ownership, which I support absolutely especially as regards these industries, there remains a good deal of room for improvement. I hope that this debate tonight, short though it will be, will make its contribution to increasing public awareness of the machinery which exists.
I am sure that my hon. Friend the Parliamentary Secretary, who, I know, is well versed in all the forms of consultative machinery from local government through to national level, will be sympathetic to the points I have to make. What is particularly encouraging to me is that I know that he is very knowledgeable about these things and I think that he will acknowledge that a failure in any of these industries or services—coal, gas, electricity or transport—can, at worst, cause a major crisis, on an intermediate level can create hardship and, when things are not going quite perfectly well, can create a great deal of irritation, since, between them, their products are essential to modern life. It is, therefore, incumbent upon me to outline what I understand to be the consultative machinery.
In the coal industry I understand that there are the Industrial Coal Consumers' Council and the Domestic Coal Consumers' Council. The objective is primarily to consider any matter affecting the sale or supply of coal, coke or manufactured fuel which is the subject of a representation made by consumers

or what the Council thinks ought to be considered, and to notify its conclusions to the Minister where action appears to be necessary, and also to consider and report to the Minister on any matter that he might refer to it.
The research departments of the National Coal Board have done a remarkable job in producing new forms of smokeless fuel in such a range and so swiftly. They have made a great contribution not only to keeping our homes warm but also, in conjunction with the Clean Air Act, to keeping the air of our great cities as reasonably clean as can be in this day and age.
It is, therefore, irritating to me when I read or hear ill-informed criticisms of the Board and its research departments about the production of smokeless fuels. Yet, often, when an area has been designated a smokeless zone, and a variety of new grates have been offered, nothing can be more irritating than when, for some reason or other, there is suddenly a shortage of specific fuel for specific grates.
From time to time, hon. Members have submitted to the Department complaints from constituents. This in itself seems to indicate that there is not enough knowledge, even among hon. Members, of the correct machinery which should be used. I confess to guilt in this respect in having sent direct to the chairman of the Board or to the Minister complaints from constituents. But I have often also pointed out to constituents that consumer councils exist to assist them in these matters. People are often amazed to learn that such machinery exists. That is the gravamen of my case.
The same applies in the electricity industry. I understand that each area board has its corresponding Consumer Consultative Council, and that the members of the Council—not less than 20 and not more than 30—are appointed by the Minister of Power as follows:
… not less than two fifths and not more than three fifths from a panel nominated from members of local authorities in the area by the representative local authority associations; the remainder, after consultation with such bodies as the Minister thinks fit, to represent agriculture, commerce, industry, labour, the general interests of consumers of electricity, and other persons or organisations interested in the development of electricity in the area.


That is quite a formidable list. Therefore, the endeavours of this great publicly owned industry are most commendable in theory, but for the housewife, the ordinary home consumer, we have not yet been able to pierce the fog, the blanket of not knowing what machinery exists, so that they can use it to the full, which would be an advantage both to the consumer and the area board.
The area board is compelled, under its terms of reference,
… to consider any matter affecting the distribution of electricity in the area, includng the variation of tariffs and the provision of new or improved services and facilities within the area, whether as a consequence of a representation or not, and to notify its conclusions to the area board; …
That alone shows that the general Council has been as wide as possible in laying down its terms of reference to cover every eventuality.
In the gas industry the arrangements are very similar to those I have outlined for the electricity industry. I understand that they stem from Section 9 of the Gas Act, 1948. There is a consultative council for the area of each board. The members—not less than 20 and not more than 30, plus the chairman—are appointed by the Minister of Power; and not less than half and not more than three-quarters from a panel nominated from members of local authorities in the area by the representative local authority associations. In addition, consultations are held with other bodies.
The structure is also similar in the transport industry. Beneath the Nationalised Transport Advisory Council, which advises the Minister on questions relating to co-ordination and so on, there are area transport users' consultative committees which the Minister may establish for such areas of Britain as he may prescribe, on the express condition, however, that there must be one such committee for Scotland and one for Wales and Monmouthshire. I cannot understand why there is not one for England. We should look into this. I can understand the necessity for having such boundaries on what might be described as national lines in view of the particular problems of language in Wales and various other matters. But it is wrong not to have an advisory council or consultative committee for

England on its own, since the other two countries have them. Generally speaking, the efforts that have been made in the establishment of the various consultative councils are admirable, but somehow or other they have failed to click.
The Consumer Council has published an admirable work called "Consumer Consultative Machinery in the Nationalised Industries". It is a pity we cannot have a full-scale debate on such a report, rather than me having to cram it into this debate tonight. In the paragraph relating to the public awareness of the Consultative Council, it says that one of the major conclusions
… which emerged from our field survey was how very limited is the extent to which the general public is aware of the existence of the consultative bodies 12 per cent. only of the sample being aware of the electricity councils, and 12 per cent. of the gas councils. Knowledge of the actual functions of the councils and of the work they are doing on the consumer's behalf must, therefore, be more limited still.
This should be a matter of grave concern to my hon. Friend and I am sure that he will treat it as such. Surely the answer lies in more publicity? Will he consider advertising the functions of the various consultative committees in local newspapers, on local radio and T.V.? There could be a number of experiments in parts of the country, results could be examined to see if public awareness has been increased, and the experiment could be stepped up.
I acknowledge the efforts made by various councils to increase public awareness, but that quotation shows that the efforts made through leaflets and handbooks have not proved successful. We should tell people that this is not just a method of advancing complaints. The public should be encouraged to submit ideas, too. For people involved in top-line policies, small suggestions can prove to be very useful. Perhaps leaflets could be exhibited on works' notice boards, and lectures and talks could be inaugurated on the reasons for such machinery. Film shows are a possibility. There is much advertising in the cinema, some interesting, some humourous. Perhaps we could do something along these lines?
Will my hon. Friend also consider increasing the liaison of our councillors and Members of Parliament with the area


boards and the consumer councils? There are many more things I would like to say, but my time is running out.
I ask my hon. Friend to take this matter seriously and to start a new drive to increase public awareness. He might even find an imaginary inflammatory document to hit the headlines and create excitement, thereby contributing to the increase of public awareness. If a programme such as I have outlined is not undertaken there is a danger of a first-class idea becoming nugatory and withering away.
My hen. Friend might also consider a conference between the three big industries—and he might pass this on to his right hon. Friend the Minister of Transport—to examine ideas for increasing public awareness of the consultative machinery.
One of the principles of public ownership is that the public not only own the industries, but the industries function on their behalf, and one of the bulwarks of modern society is that the public should be entitled to submit complaints, and should take an interest in how the industries work. With interest will come understanding; with understanding will come efficiency; with efficiency will come satisfaction.

11.12 p.m.

The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson): My hon. Friend the Member for Ealing, North (Mr. Molloy) was kind enough in his opening remarks to refer to my interest in this subject. I assure him that since I came into the House and was appointed Parliamentary Secretary to the Ministry of Power, two years ago, my interest has not flagged. I hope that I have done something, perhaps without publicity, to stimulate interest within the purview of my Department, and the industries on which he has concentrated.
I have recently, without prior notice, sat in on a number of consultative councils in the electricity and gas industry, and also on district committees, which operate under the umbrella of the consultative councils and to which my hon. Friend did not refer. While it is not for me to discuss here my reactions in detail to those meetings, I found them interesting End I have picked up a number of ideas which I shall pursue in my Department.
As I have said elsewhere on a number of occasions, we have embarked upon an era of consumer politics in a wide range of activities, not only the area which is the concern of the Ministry of Power. This subject will be at the centre of politics in the years to come. It is to be seen in housing, urban renewal, education and consumer products purchased in the stores, as well as in our industries.
It is right, at the beginning of my remarks, for me to give due credit to the many people who, over the last 20 years, have given voluntary public service throughout the country to the consultative councils and district committees under them in the electricity and gas industries and, to a degree, in the coal industry. Indeed, I could make the same remarks about those industries which do not come under my Ministry.
Many people have given excellent service, and, whatever examination one makes of the consultative machinery in the electricity, gas and coal industries, and whatever constructive criticisms which may be made of that machinery, one aspect of which we are discussing this evening, it is right to say that a lead has been given which has yet to be followed over a large part of our economy in other spheres of activity. Whatever advances may be made in the future, most of our economic activities have yet to catch up with the efforts of this consumers' representation on a formal basis which has been established over the past 20 years.
I listened with interest to the various suggestions made for extending publicity in this area. My first reaction is that I accept fully that the consultative councils in these industries are not as widely known as they could and should be. I agree very much that it is important for consumers to be made more aware of the existing machinery to protect their interests and of the proper places for them to lodge complaints and ideas.
Naturally, the most important requirement is good management customer relations, whereby people have an effective way in which they can make representations and get matters seen to promptly at managerial level. In that connection, the consultative machinery should be seen, not exactly as a long-stop, but as a reserve channel through which matters


can be investigated further if it is felt that complaints or views have not been dealt with adequately by the management concerned.
Over the last two years or so, I. have taken every opportunity possible to see for myself what is going on in the country. In my view, the lack of awareness of these organisations is due to the fact that, over the 20 years of these industries under their present set-up, there has been a steady improvement in relations between the managements and their customers. However, I hope that I do not sound smug about that, because I agree that there is a need for greater awareness.
I want to go over a number of the matters that have been activated by the consultative councils in the electricity and gas industries chiefly, though to a lesser degree in other spheres with which my Department is concerned. My hon. Friend will find that a number of his points have been picked up already, though perhaps not to the extent that he and I would like, or that members of the consultative councils would like. This question of awareness and the need for publicity is one that I have repeated constantly in my discussions with representatives of these bodies.
On the point made in the Consumer Council's Report, the same point was made subsequently in a report about which I am sure my hon. Friend will know but to which he did not refer. It is a publication by the Co-operative Party entitled "Public Monopoly and the Consumer", issued in the latter part of last year. A good deal of consideration has been given to publicity and awareness by the consultative councils since the point was made in those reports a year or 18 months' ago. Quite a lot has been done since.
Arrangements vary between councils, but there are displays of posters and leaflets in showrooms. If hon. Members, members of local authorities or members of the public, note that these are not on display, they are welcome to make the information known to us, and we will get in touch with the appropriate showrooms and do our best to ensure that adequate publicity is given to the posters and

leaflets which are available for display in showrooms.
These leaflets and posters have been made available recently to the G.P.O. and they are gradually being displayed throughout the country in various post offices. An attempt is being made by many of the consultative councils to get local authorities to display posters and leaflets in such places as public libraries, town halls and other local offices. The success of these efforts varies considerably, but there is this constant pressure. The more local representatives, Members of Parliament, councillors, as well as the Ministry and the people in the consultative councils, can bring to the notice of local authorities and other similar bodies, including local post office managers, the need to put these items on display the better.
These leaflets and posters are being produced and distributed. Some boards, as a result of the representation of their consultative councils, have issued notices when the bills go out so that members of the public know that, if they are not satisfied with consideration of their complaints or queries by the management, they can go to the consultative councils to pursue the matter further because they have the addresses and the names of people distributed to them.
I understand that a number of councils distribute their annual reports and other literature to the local Members of Parliament concerned. Others have liaison with the local citizens' advice bureaux, the welfare departments, and the local authorities. Talks are being given. In certain cases councils make a point of holding meetings in different parts of their area during the year. I have seen something of this recently, having sat in on meetings at various addresses within the Board areas.
I do not mean that it is common practice to find a high standard everywhere. There is need to maintain pressure and interest in the publicity to which my hon. Friend has referred, but the councils are prepared to consider new methods. I am sure that they will read the report of tonight's short exchanges between my hon. Friend and myself and will take note of ideas. I will certainly read HANSARD to see whether there are any particular


points which we can put to the chairmen of the consultative councils at Ministerial level.
My hon. Friend referred to radio and television, broadcasts. There have been such broadcasts recently in some areas. There have also been discussions on television between secretaries and chairmen of some of the consultative councils. There have been discussions on radio and on television in certain areas of the very Consumer Council Report referred to by my hon. Friend.
I have already mentioned that standard posters have recently been produced and are being circulated throughout the country. There are other—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at twenty-three minutes past Eleven o'clock.